Time For CFIUS Reforms Has Come

What a mess.  The Committtee on Foreign Investment in the U.S. has been around for as long as I worked in government, rarely raising an eyebrow anywhere because it moved slowly, relied on voluntary reporting for the most part,  and took its time making decisions.  Over the years, that has all changed.  Now, there is sentiment in the Congress for legislation to strengthen and clarify the rules for companies buying into the U.S.  What prompted most of that review and revision is State-Owned Enterprises, almost all from China, buying into the U.S. critical technologies like microchips.

In today’s Wall Street Journal there is another case that is likely to push that movement forward.  I know Congress has been busy on other things, but there is agreement on both sides to get moving on this, and this story gives good reason for some urgency.  It is the case of HNA.  The Journal says, “The requests from Capitol Hill follow recent allegations by a U.S. firm that HNA provided ‘knowingly false, inconsistent, and misleading information’ about its ownership and ties to the Chinese government during the interagency panel’s review of a $325 million deal.”

Of course HNA says it has no connection with the government of China.  In a great article, the Financial Times put this all together pretty well, naming names and posting faces of most of the leadership of HNA.  Most, and they were pretty blunt about a few of the leaders that they couldn’t find much about.  I pointed out at the time that HNA was feeding the Hillary Clinton campaign through other charities and its own.  This sweetheart arrangement fell through, and the protection of HNA went with it.

There are many others besides HNA, and the Chinese will move from one company to another when attention is drawn to one of them.  They keep the national strategy going by changing the face to U.S. regulators.  As I pointed out in my testimony on this last year, CFIUS can’t keep up with the way China is hiding its state connections to its own companies.  They have gotten better because it was possible for researchers to find military leaders in government companies, and ownership and management by state agencies.  It is harder to find anything like that anymore, because their websites now hide the truth.