The United States House Committee on Thursday (November 13) sent a letter to Morgan Stanley regarding its underwriting of Zijin Gold International’s initial public offering (IPO) in Hong Kong, raising concerns about regulatory, financial, and reputational risks for both the bank itself and American investors.
“Zijin Gold” is a subsidiary of the Chinese state-owned “Zijin Mining Group.” “Zijin Mining” is a global mining company headquartered in China, which has been blacklisted by the U.S. government for engaging in actions that violate the human rights of the Uyghur people.
According to Reuters, the House Committee on China Issues stated that in September of this year, Morgan Stanley assisted Zijin Gold in its IPO and helped its parent company raise funds by selling non-Chinese gold mining assets and listing on the Hong Kong Stock Exchange. The committee has raised questions about whether Morgan Stanley aided Zijin Mining in circumventing U.S. sanctions.
Chairman of the House Committee on China Issues, Representative John Moolenaar, wrote to Morgan Stanley’s CEO Ted Pick, stating, “When American financial institutions engage with Chinese (CCP) companies involved in forced Uyghur labor, it undermines the U.S. government’s goal of globally curbing forced labor.”
In January of this year, Zijin Mining was added to the Entity List for alleged violations of the Uyghur Forced Labor Prevention Act. The U.S. government has determined that these companies are implicated in acts of genocide against ethnic minorities in Xinjiang, China, and has restricted their goods from entering the United States.
U.S. officials have stated that the Chinese authorities have established forced labor camps in Xinjiang targeting Uyghurs and other Muslim minorities. Beijing, however, has consistently denied these allegations.
Moolenaar requested Morgan Stanley to provide all documents and communication records related to Zijin Mining, the Chinese government, the Chinese Communist Party, the military, and human rights violations activities, with a deadline set for submission by November 27th.
This inquiry letter is the latest action by the House Committee on China Issues targeting U.S. financial institutions underwriting Chinese companies’ Hong Kong IPOs linked to the Chinese military or illegal labor practices.
In July of this year, the committee subpoenaed JPMorgan and Bank of America to provide documents related to their underwriting of the Hong Kong IPO of the world’s largest electric vehicle battery manufacturer, “CATL.” “CATL” has been identified by the U.S. Department of Defense as a Chinese military enterprise.