Cabinet friction surfaces as Bessent shifts blame to Lutnick as scrutiny intensifies over Nvidia scandal

US Treasury Secretary Scott Bessent has blamed the Commerce Department, run by Howard Lutnick, of failing to properly oversee the export of high-specification Nvidia chips, as the fallout from the scandal widens, the BBC reports.

Bessent appeared on CNBC’s Squawk Box on Friday morning, where he said several government agencies “were in favour of putting Megaspeed on the entity list for months”. Referring to the Department of Commerce’s Bureau of Industry and Security, he told reporters to direct questions to Commerce, adding, according to The Hill, that “you will have to ask them about their internal processes”.

He said he was frustrated by the delay and by reports of AI chips leaking into China.

Megaspeed had been probed by US government agencies over suspicions it had been smuggling those chips into China, reports said, but it is not on a list of firms that US companies are prevented from working with. The Singaporean cloud computing and data center firm was a buyer of Nvidia’s advanced chips. Jensen Huang left the company he co-founded after revelations he had an affair with a former Megaspeed executive.

The comments follow a reported clash between the two cabinet members. At a White House Situation Room meeting on Thursday after the midterm elections, Bessent pressed Lutnick on why Megaspeed had not been added to the Commerce Department’s entity list, Axios reported, and Lutnick replied that he would “look into it.” The Commerce Department denied the Situation Room confrontation occurred.

According to CNN, Treasury staffers argued that Megaspeed’s suspected chip diversion should put it on the list, but despite those warnings, Commerce has so far refused. The Commerce Department hasn’t added any company to the list in more than a year.

The New York Times reported Commerce Undersecretary Kessler abruptly stopped an investigation into Megaspeed after Nvidia intervened, while separate reporting in the Financial Times said the department was delaying efforts to have the cloud computing firm included.

Bessent also faulted Nvidia. He argued the real question is whether Nvidia knew its client and whether it made a robust effort to prevent leakage, and said those responsible at the company should be held accountable.

a