Daniel Hartnett, Associate Managing Director in the Compliance Risk and Diligence practice of Kroll, a division of Duff & Phelps, was featured in Defense Acquisition Magazine discussing national security risks in industrial base investments.
In his article, “Whom Can You Trust?”, Hartnett describes how small and medium-sized U.S. companies developing technology with military potential – firms often reliant on external investments – risk being funded by state actors that wish to leverage their ownership to gain access to key defense technologies at the expense of U.S. national security.
Hartnett states, “There are resultant concerns that adversarial states might seek to leverage investments in such companies to acquire key defense technologies critical to U.S. military capabilities, the same technologies that would otherwise be denied to the state. The state need not directly own the targeted company, either, for this potential to exist. Rather, it could exert control through several layers of ownership, in effect obscuring the true ownership and control of the company.”
Therefore, he concludes, to minimize the risk of predatory economic behavior by adverse actors, it is critical that investors in critical defense technology companies be thoroughly vetted through programs such as the Department of Defense’s Trusted Capital Marketplace.
Read the full article in Defense Acquisition Magazine.
