GAO Report on Sovereign Wealth Funds


The U.S. Government Accountability Office has released its second report on Sovereign Wealth Funds: Laws Limiting Foreign Investment Affect Certain U.S. Assets and Agencies Have Various Enforcement Processes (.pdf). This report was sent to the Committee on Banking, Housing, and Urban Affairs in the U.S. Senate.

The Report found the United States is generally open to foreign investment, except for sector-specific restrictions. The banking, agriculture, transportation, natural resources and energy, communications, and defense sectors have federal laws that apply to foreign investment specifically. These sectors have laws that contain provisions that either restrict the level of foreign investment, limit the use of a foreign-owned asset, or at least require approval or disclosure of any foreign investments.

In addition to these specific limitations, there is the broad power under the Defense Production Act of 1950 granted to the CFIUS to review a foreign acquisition, merger, or takeover of a U.S. business that is determined to threaten the national security of the United States.

Restrictions on foreign investment in real estate also exist in many states. According to a Alien Land Ownership Guide from the National Association of Realtors, 37 U.S. states had some type of law affecting foreign ownership of real estate. Most of the laws are merely a requirement that a foreign investor register as a company doing business in the state before purchasing property. Some states specifically prohibit foreign ownership of certain types of land. One common type of real property restriction was for agricultural land. Fifteen states having some law governing foreign ownership in this area.

The Report’s recommendation for Executive Action:

To enhance their oversight of sectors subject to laws restricting or requiring disclosure of foreign investments, we recommend that the Chairman of the FCC and the Secretaries of Agriculture and Transportation review the current sources of the information their agencies currently monitor to detect changes in ownership of U.S. assets— which are subject to restriction or disclosure requirements applicable to foreign investors—and assess the value of supplementing these sources with information from other government and private data sources on investment transactions.


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