Bloomberg: More U.S. Lawmakers Call for Scrutiny of Chinese Takeovers

News story originally published at Bloomberg.com

By Anousha Sakoui

Two U.S. representatives from California, including the head of the House intelligence committee, have joined the group of lawmakers backing an appeal to the government to increase scrutiny of Chinese takeovers of American companies.

Republicans Devin Nunes and Ken Calvert added their names to a bipartisan list of 16 other legislators who asked the U.S. Government Accountability Office in a Sept. 15 letter to review the matter, according to Clark Fonda, deputy chief of staff for Representative Robert Pittenger, a North Carolina Republican who drafted the letter. Nunes chairs the House Permanent Select Committee on Intelligence.

The lawmakers want the GAO to determine whether the Committee on Foreign Investment in the U.S. has kept pace with the growing number of foreign acquisitions stateside.

The letter addressed the rise of investments from state-controlled enterprises from China and cited deals such as Dalian Wanda Group Co.’s acquisition of a controlling stake in AMC Entertainment Holdings Inc., and AMC’s pending purchase of Carmike Cinemas Inc., as cause for concern. The lawmakers also cited foreign takeovers in other industries such as agriculture. The GAO said last week it would undertake the review of CFIUS early next year.

A spokesman for Nunes confirmed the lawmaker had joined the group. A spokesman for Calvert didn’t immediately return a request for comment.

“It’s a huge deal that the chairman of the House intelligence committee has thrown his weight behind this request because it demonstrates the intelligence community’s concern about these issues broadly, and the need for more CFIUS authorities to deal with evolving threats,” said Rick Berman, a Washington-based lobbyist who started a campaign against Chinese investment in U.S. media companies this summer.

Wanda, which has been one of the most active Chinese acquirers of entertainment assets, has in the past few weeks also agreed to a movie marketing and financing deal with Sony Pictures for releases in China and is in talks to buy awards show producer Dick Clark Productions. It will become the U.S.’s biggest owner of theaters if the $1.2 billion deal for Carmike is approved. Wanda’s chairman is Wang Jianlin, China’s second-richest man.

Wanda declined to comment on the lawmakers’ request to the GAO.

“Chinese censorship of U.S. media is one of several important concerns that didn’t exist when CFIUS was created in the 1970s,” Pittenger said Thursday in an e-mailed statement. “The GAO study will help Congress determine what additional authorities or procedures are necessary to allow CFIUS to continue performing its essential functions in a rapidly evolving national-security landscape.”

In a separate move, one of the representatives who signed the letter, Texas Republican John Culberson, urged the Justice Department to adopt recommendations and suggest legislation to improve enforcement of the Foreign Agents Registration Act. The 1938 statute, adopted in response to concerns about Soviet and Nazi propaganda in the U.S., requires the disclosure of lobbyists for foreign agents. But the law has been weakened and the number of registrants has fallen, Culberson said in a letter sent Thursday and obtained by Bloomberg News.

Culberson, a member of committees that approve funding for the Justice Department, asked Assistant Attorney General John Carlin to examine how FARA may apply to foreign control of U.S. media companies “that may be subject to foreign propaganda, censorship and other pressures that lead to self-censorship in order to receive financing and distribution.”

The Justice Department didn’t immediately respond to requests for comment.

The Washington Post’s editorial board said Wednesday that the lawmakers were right to be concerned.

“It is not far-fetched to assume that China would seek to spread pro-regime propaganda via ownership of U.S. entertainment media,” the editorial board wrote.