BlackRock faces Congressional probe for worsening national security threat: Report
A House Committee Investigates BlackRock and MSCI for Supporting the Chinese Communist Party
A House committee is currently investigating two mammoth asset management companies, BlackRock and MSCI, over their alleged links to companies that support the Chinese Community Party.
The House of Representatives Select Committee on the Chinese Communist Party has notified BlackRock and MSCI about the investigation and has called for extensive details regarding investments that support China.
“It is unconscionable for any U.S. company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses. We therefore seek additional information regarding this deeply troubling matter,” Committee Chairman Rep. Mike Gallagher of Wisconsin and Ranking Member Rep. Raja Krishnamoorthi wrote in letters that went to the CEOs of the two firms.
The committee’s goal, as stated on their website, is to “build consensus on the threat posed by the Chinese Communist Party and develop a plan of action to defend the American people, our economy, and our values.”
BlackRock manages over $9 trillion in assets, primarily through pension plans and savings. The company has stated that it is working with the committee to address their concerns.
MSCI, on the other hand, selects securities for indexes that are often used as a basis for investment portfolios. The Journal reported that over $13 trillion in assets are benchmarked to MSCI products. MSCI has stated that they are reviewing the committee’s communication.
The letter to BlackRock revealed that “a brief review of just a few of BlackRock’s funds revealed that BlackRock facilitates American capital flows to more than 20 blacklisted PRC companies.”
The committee’s investigation found that BlackRock has invested more than $429 million in PRC companies that pose national security risks to the United States. The letter to BlackRock emphasized that these investments are funding companies that develop weapons for the People’s Liberation Army (PLA) and advance the CCP’s mission of technological supremacy.
The letter to MSCI was similar, noting that MSCI “facilitates American capital flows to dozens of blacklisted PRC companies.”
The committee’s investigation identified at least 40 listed companies across five indexes that are supported by MSCI. The letter called for disclosure of which companies were supported by investments and whether due diligence was conducted before investing in those companies.
The committee’s efforts are part of broader Congressional actions to address American support for Chinese companies. One such action is the DITCH Act, a bill that aims to stop money from tax-exempt entities supporting China. The bill would require tax-exempt entities, such as non-profits and public pension plans, to divest from Chinese companies or risk losing their tax-exempt status.
“American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party. Universities, non-profits, public pension funds, and other institutions that want preferential tax treatment must choose: are they committed to their professed values or to financing a genocidal communist regime?” said Gallagher, who introduced the bill in the House.
Republican Sen. Josh Hawley of Missouri supports the bill in the Senate, stating that investing in China goes against the values and interests of the United States.
As the investigation unfolds, it remains to be seen how these asset management companies will respond and what actions will be taken to address the concerns raised by the House committee.
Source: The Western Journal
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