NYT: Justice Deptartment is Asked to Review Chinese Company’s Hollywood Purchases

  October 7, 2016   News Stories

News story originally published at NYTimes.com

By Michael Forsythe

The aggressive expansion of the Chinese company Dalian Wanda Group into the American film industry drew increased scrutiny from Congress this week as a prominent lawmaker asked the Justice Department to review a spate of recent purchases by the company, which has close financial ties to relatives of senior Chinese Communist leaders.

The congressman, John Culberson, Republican of Texas and chairman of a subcommittee overseeing the Justice Department in the House Appropriations Committee, asked the department in a letter to review Wanda’s acquisitions as part of an effort to overhaul and possibly broaden rules on foreign purchases of United States companies and to review decades-old laws governing foreign agents in the country.

Wanda, now the world’s biggest owner of movie theaters, bought AMC Entertainment Holdings, a chain based in the United States, in 2012 and is bidding to buy its rival Carmike Cinemas. In January, Wanda bought Legendary Entertainment, a Hollywood production company, and Wanda’s billionaire chairman, Wang Jianlin, is seeking to buy a major Hollywood studio.

The concern of Mr. Culberson and others is that Wanda’s purchases are part of a move by the Communist Party to expand its global influence to try to ensure that any portrayal of China in Hollywood movies is favorable. It has been more than a decade since a Hollywood studio made a major movie critical of China’s authoritarian government.

“These acquisitions, as well as many more co-financing arrangements, allow Chinese state-controlled companies a significant degree of control over the financing and content of American media that raises serious concerns about how this may be used for propaganda purposes,” Mr. Culberson said in the letter, dated Oct. 6, to John P. Carlin, the assistant attorney general for national security. The letter also mentioned recent Hollywood purchases by other Chinese companies.

The Communist Party ties of Wanda and Mr. Wang were the subject of a New York Times investigation in April 2015. The report found that relatives or business associates of four members of the party’s ruling Politburo, including relatives of President Xi Jinping, were among the company’s earliest outside investors. All appear to have earned spectacular returns.

Shares held in the name of a niece of one Politburo member, Wang Zhaoguo, multiplied in value by more than 1,000 times, from less than $500,000 at the time they were acquired in 2007 to more than $600 million in early 2015, the Times investigation found.

Wang Jianlin, a longtime Communist Party member, was a delegate to the 2007 congress that chose the next generation of party leaders, including Mr. Xi. From 2008 to 2013, he was a member of the standing committee of the Chinese People’s Political Consultative Conference, a high-level advisory body to China’s legislature. A company owned by an employee of the son-in-law of the body’s chairman at the time, Jia Qinglin, had acquired a stake in Mr. Wang’s family holding company only weeks before the 2007 party conclave, The Times found.

By early 2015, those shares were worth more than $250 million, and a stake in Wanda’s Chinese cinema company that was owned by the son-in-law’s investment company was worth more than $130 million.

Late last month, Wanda fired an executive after he was found to have bribed a local official in the northeastern city of Dalian in 2008 and 2009. The official helped the company obtain government approval to complete its transition from a state-owned company to a private enterprise, according to a court judgment.

Zhou Moming, a Wanda spokesman, did not respond to an emailed question asking about the congressman’s letter.

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