Concern has been growing that China, Russia and other adversaries are stealing innovative American technology and using it to gain an economic or military advantage over the U.S.
For the past two and a half years, a Defense Department team has been hunting for investments in U.S. companies by individuals representing the interests of foreign governments, and that threaten our national security.
As head of the team, David Rader, 34, leads the effort, reinvigorating and expanding investment monitoring by partnering with federal agencies such as the Securities and Exchange Commission, venture capital firms, think tanks and international organizations such as NATO, to identify security threats and find ways to deal with them.
“For decades, many people in Washington have watched our adversaries buy or steal key technologies and fold them into advanced weapons designs that may one day target our own forces,” said Isaac Jenkins, a foreign service officer with the State Department. “David built a team of data scientists, business analysts, project officers and engagement professionals to conduct multiyear assessments on the resilience of the defense industrial base and to identify vulnerabilities.”
As a veteran of the armed forces and with experience as both a bankruptcy lawyer and an investment banker, Rader joined the Defense Department to bring urgency to the monitoring of foreign investments, particularly in the space industry.
“Space is the most contested warfighting domain,” Rader said. “We’re preventing bad guys from knowing where our national security assets are and what we’re doing, and we’re protecting and creating an environment that will accelerate innovation in the space industry so that America makes huge technological leaps for the next generation.”
While the instances where he and his team have been involved must remain secret, in general Rader has focused mostly on innovations that could be converted by China, Russia and other nations into weapons.
As Andrew Pahutski, the director of the Defense Department’s Office of Foreign Investment Review, explained, “There are commercial technologies that can be turned to military use, especially with space technologies.”
“David does a great job of orienting investors, technologists and engineering minds to that linkage,” Pahutski said. “As head of the team, David gives clear, unambiguous direction to his staff, and makes sure they are trained and equipped with the right tools. He sets a vision, builds relationships and gets consensus, which are the hallmarks of leadership.”
The monitoring of foreign investments is not new. For decades, there has been a Committee on Foreign Investment in the United States, a 14-agency organization led by the departments of Commerce and Treasury, which is charged with reviewing foreign investment for potential national security risks.
With an eye on Chinese investments in U.S. technology, Congress expanded the committee’s powers in 2018 to specifically include the probing of venture capital investments in American companies that are making critical technologies. But the law said nothing about specific new actions.
Rader championed the creation of a branch within the Defense Department’s Office of Foreign Investment Review to gain greater insights into core technologies and to protect those innovations from foreign state-sponsored acquisitions. Rader was then chosen to lead this new team.
“David has substantive knowledge, whether law, business, economics or who the underlying authorities are,” said David Snyder, the deputy director of the Treasury Department’s Office of Compliance, Enforcement and Monitoring. “He thinks outside the box and pulls in other agencies. He has done a tremendous job in creating those partnerships.”
For instance, Rader turned to venture capital experts to provide advice on how to help smaller companies that might be negatively affected if a foreign investor from China was forced to disinvest. In addition, his team has encouraged venture capital firms, particularly those in the space industry, to get their investors vetted by DOD to help remove foreign investments and influence that pose a national security risk.
“David has led investigations into illicit activities by critical technology investors that have stopped some of the most advanced space technologies from being acquired by our competitors,” Jenkins said. “He has cut through bureaucratic red tape, shifted mindsets and built coalitions so we can actually respond to threats to our security.”
Rader said the crux of what his work centers on is identifying threats and protecting our national security, along with U.S. innovators and investors.
“There are some really bad actors and companies that have done a really good job of masking who they are, who they work for and who they supply,” Rader said. “We are working to deny these adversaries access to critical technologies.”