How JPMorgan, Bank of America are cashing in on China Inc. — despite pressure from US lawmakers
The C꧒EOs of JPMorgan and Bank of America are resisting a demand by US lawmakers to withdraw from underwriting this week’s $4 billion IPO for a China-based Hong Kong elec🌄tric car battery company that a key Congressional committee alleges has ties to Beijing’s military, On The Money has learned.
The chairman for the ༺House Select Committee on China has even spoken directly to JPMorgan boss Jamie Dimon to prod him to drop out of the offering for a company that goes by the name CATL, s🌟ources said.
The company is regarded as the wor🎉ld’s leading manufacturer of electric batteries, but some lawmakers believe it is a front for Chinese 🌞military expansionism — a charge denied by a company spokesman and officials at the big banks.
That’s why executives at JPM, the nation’s largest bank, and BofA, which is second, tell On The Money they’re planning to remain on the underwriting team, setting up a nasty confrontation with the committee as the company begins to sell stock to the public.
The committee asked the banks for an explanation as to why they should go ahead with the underwriting, but has yet to hear🏅 back, sources told On The Money.
“The American people deserve to know why US financial institutions are suppo꧒rting companies that fuel the malign activities of our adversaries,” a committee spoke🧸sman told On The Money.
“Unfortunately, Bank of America and JP Morgan are slow-walking their responses to the Select Committee, while𝓰 they continue to support the IPO of a DOD (Department of Defense)-designated Chinese military company.”
One explanation is money. Both big banks are so-called book runners, or lead underwriters for CATL, aka Contemporary Amperex Technology Co. Limited, on its stock offering that will allow the company’s shares to list on the Hong Kong stock market. They stand to split the lion share of the roughly $240 million in underwriting fees when the deal is completed.
A JPMorgan spokesman wouldn’t deny the conversations with Dimon took place but declined further comment. A BofA spokesman had no comment.
The select committee, formally named the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, fears the banks are putting profits ahead of national security concerns by aiding Communist China’s military machine and abetting the country’s expansionist goals, people on the committee told On The Money.
In letters sent to Dimon, and Bank of America CEO Brian Moynihan, the committee described CATL as “a Chinese military company as designated by the US Department of Defense under Section 1260H of the National Defense Authorization Act.”
“If JPMorgan proceeds with underwriting CATL’s IPO, it risks supporting a company linked to the ongoing genocide of Uyghur Muslims in Xinjiang, China, the erosion of American manufacturing, and the endangerment of US service members,” wrote Committee chairman John Moolenaar, Republican congressman from Michigan in an April 17 letter to Dimon. He penned a similar missive to Moynihan.
But bank reps say they are following all US government rules for underwriting deals for foreign companies because CATL is not on the State Department’s or Treasury’s ban list. They also say the company’s primary business involves electric car batteries that many US companies use.
In a statement to On The Money, a CATL spokesman said the committee’s assertion that it is an arm of the Chinese Communist Party is ജpatently false.
“The allegations contained in the letter are factually incorrec♌t and without merit. CATL has never engaged in any military-related business or activities. Our lithium-ion batteries are not used in any submarines. We strongly believe the US Department of Defense’s designation of CATL as a ‘Chinese Military Company’ is an error. We are in the process of engaging directly with DoD to clarify any misconceptions and correct that error.”
The companꦛy added that it has no relationship with o🌃ne company the committee cited in its letters to Dimon and Moynihan as a top supplier that is a “paramilitary entity of the Chinese” that also operates forced labor camps.
Charlie Gasparino has his finger on the pulse of where business, politics and finance meet
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It’s unclear if the White House, which is in the middle of a trade war with China, has been coordinating its trade negotiation efforts with the China-skeptic lawmakers, but one thing is certain, the committee isn’t impressed with CATL’s denial.
In a statement to On The Money, a committee spokesman said “CATL’s attempt to deny its role in China’s military modernization and the ongoing genocide of the Uyghur people is contradicted by ꦐpublic reporting and evidence uncovered by the Select Committee. If CATL were telling the truth, they would be transparent about their supply chain and their operations in China. But Chinese law prohibits them from sharing basic information with anyone outside China.”
In recent weeks, the committee has ramped up its oversight of China Inc., dovetailing with the White House’s own China trade contretemps. The committee recently wrote to President Trump’s new SEC chair, Paul Atkins, calling on ▨him to launch an investigation into whether Chinese companies with shares trading on US exchanges are failing to comply with♔ USA disclosure laws, including any possible ownership ties with the CCP.
China is considered maybe the most ✃aggressive trading partner with the US, regularly taxing US goods, expropriating US trade secrets to support its export-driven economy and dumping cheap goods on US consumers that has harmed domestic manufacturing.
On Monday, the White House and the Chinese announced a “pause” in their trade war. For the next 90 days, both the US and China have significantly reduced tariffs on each country’s imported goods until a more sweeping deal could be worked out.
