SoftBank fights with the US National Security Committee

SAN FRANCISCO (Reuters) – The SoftBank Group Corp. has agreed to relinquish seats on the board, access sensitive information, play a more pbadive role in startups and do business. other concessions to obtain the government's permission on its technology agreements, facing a new Japanese investor law aimed at cracking down on foreign investors.

SoftBank's investment style has made it a frequent visitor to a US government group known as the US Committee on Foreign Investment (CFIUS), which reviews foreign investment for national security. and competitive risks.

"We know that the transactions will be reviewed," said Marcelo Claure, deputy general manager of operations at SoftBank Group Corp., during an interview with Reuters this week. "We have respected what the US government wants."

SoftBank likes to take major holdings in companies working in the fields of artificial intelligence, data badysis, financial services and autonomous cars – technologies increasingly seen as critical to security national. This places them at the center of a law signed last year by US President Donald Trump, which extends the powers of the CFIUS.

Giving board seats and access to private information would make SoftBank less threatening to the CFIUS, which would give its contracts a greater chance of being approved.

"We would not accept that if we ran businesses," Claure said of the concessions. "We were not in. We are in the business of investing."

Claure declined to give details of the investments for which SoftBank had to make concessions or give up board seats, and the US government does not comment on the CFIUS exams.

The regulations have dissuaded many foreign investors from investing even in US technology companies.

"It's all a conversation with the government, so you think you're going to pick your battles," said Claure.

A regulatory battle that SoftBank has chosen, to date, to stay out of business concerns the board seats of Uber Technologies Inc. As part of an $ 8 billion investment, SoftBank was closed in January 2018, which gave it a 16% stake in Uber and made it the largest shareholder. SoftBank was supposed to get two seats on the board of directors.

CFIUS has reviewed SoftBank's investment in Uber, but SoftBank has yet to officially review the two board seats, Claure told Reuters.

As a result, more than a year later, Claure and Rajeev Misra, who oversees SoftBank's $ 100 billion Vision Fund, have not yet sat on the board. The result is that Uber on Thursday launched its initial public offering with a board of directors consisting of 12 directors, not 17 long-standing members.

Three other independent directors can only be appointed after the membership of Misra and Claure on the board.

By the time Uber's shares start trading on the New York Stock Exchange in early May, SoftBank may have missed its opening. When it is made public, Uber's bylaws will change and erase old agreements with its directors, according to Uber's IPO released Thursday.

Claure said SoftBank could still submit its headquarters plan to CFIUS, but added that "this has not been a priority for us" and that SoftBank still has the desired access to Uber executives.

BUILD A TEAM OF LOBBYISTS

After becoming Chief Operating Officer in May 2018, Claure strengthened SoftBank's presence and lobbying power in Washington.

"The first job was to change the conversation with the US government and explain to the US government what SoftBank is," said Claure.

He hired Ziad Ojakli, a former Ford Motor Co lobbyist, to improve his relationship with regulators.

Last fall, SoftBank hired a former White House staffer and deputy from the Commerce Department in Washington. He hired Jeffrey Dressler, a former national security adviser to US congressmen, as director of national security policy in January.

Even without a seat on the board of directors nor more control in a company, SoftBank still exercises a lot of influence. SoftBank sometimes forces companies to achieve their performance goals before receiving money and generally prohibits founders and employees from selling their shares.

Last month, SoftBank unveiled a $ 5 billion fund for investment in technology companies in Latin America, where it will largely escape CFIUS control. Claure said SoftBank had already reviewed more than 140 companies for their investments and entered into several deals.

But Claure said SoftBank was not withdrawing from CFIUS.

"We are going to find ways to invest in the United States," said Claure.