[Infowarrior] - US raises objections over ICQ sale plans

[Richard Forno]

US raises objections over ICQ sale plans

By Joseph Menn in San Francisco

Published: June 15 2010 20:25 | Last updated: June 15 2010 20:25
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http://www.ft.com/cms/s/0/3333e36e-78a7-11df-a312-00144feabdc0.html

Senior US law enforcement officials have objected to AOL’s pending sale of one of the largest instant-messaging services to a Russian investment firm, fearing it will put some of the world’s top criminals further from their reach.

Investigators at federal agencies charged with scrutinising cyber crime are concerned about the $187.5m acquisition of ICQ by Moscow-based Digital Sky Technologies, which has been rapidly expanding its holding of internet companies.

Digital Sky, led by physicist-turned-banker Yuri Milner, the 47-year-old chief executive, already owns Russia’s largest e-mail provider and three of the country’s leading social networking sites. In 2009, it bought stakes in Facebook, the world’s largest social network, and Zynga, the online games developer.

ICQ is the leading instant messaging service in Russia, Germany and the Czech Republic and, according to law enforcement investigators, is one of the main avenues of communication for criminal groups in eastern Europe, some of whom never meet in person.

ICQ’s headquarters remained in Israel after AOL acquired it for $400m in 1998. Israel and the US are close allies and in some cases US investigators have gained access to the chat transcripts on ICQ of criminal suspects.

The situation highlights how the line between law enforcement and national security has blurred with the rise of cyber warfare.

The current fear is that ICQ’s computers might move to Russia, where co-operation with western law enforcement is far more difficult to obtain. “Every bad guy known to man [is on] ICQ,” one investigator said in an interview.

The objections have reached the Committee on Foreign Investment in the US, a secretive panel known as CFIUS and led by the US Treasury. The committee can recommend that transactions be blocked or modified on the grounds of national security, people familiar with the matter said. The panel also has representatives from the departments of defence, justice and homeland security.

“We’ve raised the concerns,” said another law enforcement official.

But CFIUS insiders said they did not expect the panel to stop the sale. It has 30 days after the companies formally notify CFIUS of the transaction to warn them that it plans to investigate further. More than 30 days have passed since the transaction’s announcement on April 28 without any such warning being issued, said Alexander Tamas, a Digital Sky partner in London.

It is possible that the formal deadline triggered by a filing has not yet elapsed, but law enforcement concerns rarely rise to the level that  prompts CFIUS to intervene, according to those who have worked for the body.

AOL, the US Treasury and the homeland security department all declined to comment.

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