Scott Bessent, the Treasury secretary, blamed the Commerce Department on Friday for the government’s failure to sanction the Singaporean data center firm Megaspeed, saying that other departments had pushed for the measure but that Commerce “has the pen.”
The Treasury, Defense and State Departments and the U.S. trade representative were all in favor of putting Megaspeed on a trade blacklist called the entity list for months, but the Commerce Department is in charge of that authority, Mr. Bessent said on CNBC on Friday.
“You will have to ask them about their internal processes,” he said, adding, “Treasury and my deputy has been pushing for this for months at the deputies level.”
“The real story here should be: Did Nvidia know their client, and was there a robust effort at Nvidia to make sure that there was no leakage and that they were selling to what were obviously pass-through shell companies,” he said. “I think it’s important that anyone at the company there be held accountable for that.”
Frustration is boiling over within the administration and on Capitol Hill about Megaspeed, the company led by a woman U.S. intelligence deemed to be an asset for the Chinese government.
The woman, Alice Huang, had a relationship with Nvidia’s chief executive, Jensen Huang. Mr. Huang resigned from his company on Thursday in the wake of revelations about that and another affair, sending the company’s stock price cratering.
Commerce Secretary Howard Lutnick has frequently clashed with other officials in recent months over technology exports, which his department oversees. He has urged caution on sweeping export restrictions and recommended more surgical action, drawing accusations from others in the administration and in Congress that his department has become too cozy with Nvidia and Mr. Huang.
The New York Times reported on Wednesday that Mr. Bessent had confronted Mr. Lutnick last week over his handling of Megaspeed, demanding to know why the United States had not already banned sales of advanced A.I. chips to the firm. Mr. Lutnick said he would move quickly to put restrictions on Megaspeed in place, people briefed on the exchange said.
The move to blacklist Megaspeed had been discussed earlier at a meeting of the deputies of cabinet officials, where Jeffrey Kessler, an under secretary in the Commerce Department, deferred on taking action, saying that the decision was up to Mr. Lutnick, the people said.
A spokeswoman for the Commerce Department denied that the conversation between Mr. Bessent and Mr. Lutnick took place. She said that the decision about whether to add companies to the entity list was an administration-wide one. The Treasury Department did not comment.
Mr. Bessent questioned on Friday what Mr. Huang and Nvidia had known about Megaspeed’s business, and suggested that Nvidia should be held accountable if it did not have adequate oversight.
Megaspeed bought Nvidia chips to set up data centers in Southeast Asia that serve Chinese clients, a legal loophole in U.S. export controls. Both the Trump administration and Congress have been weighing rules to crack down on that business. The government was also investigating Megaspeed for allegedly smuggling some Nvidia chips into China, in violation of U.S. law.
“There is a lot of leakage in the system, and we are constantly working to close that down,” Mr. Bessent said.
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