[Marxism] [SUSPICIOUS MESSAGE] Trump Aide’s Deal With Chinese Firm Raises Fear of Tangled Interests

Louis Proyect lnp3 at panix.com
Wed Feb 1 07:45:09 MST 2017


NY Times, Feb. 1 2017
Trump Aide’s Deal With Chinese Firm Raises Fear of Tangled Interests
By SHARON LaFRANIERE, MICHAEL FORSYTHE and ALEXANDRA STEVENSON

WASHINGTON — A secretive Chinese company with deep ties to the country’s 
Communist Party has become one of the biggest foreign investors in the 
United States over the past year, snapping up American firms in a string 
of multibillion-dollar deals. But it is one of its smaller deals that is 
apparently stalling the White House career of a top adviser to President 
Trump.

Anthony Scaramucci, a flamboyant former campaign fund-raiser for Mr. 
Trump whom the president has appointed as the White House liaison to the 
business community, has been in limbo for more than a week since he 
agreed to sell his investment firm to a subsidiary of the Chinese 
conglomerate, HNA Group.

Mr. Scaramucci is on the job but has yet to be sworn in, partly because 
of concerns about the Jan. 17 deal, according to two administration 
officials who spoke on the condition of anonymity because they are not 
authorized to publicly discuss personnel matters.

It is the second time a politically connected Chinese company has chased 
a business deal with an incoming White House official. And it is 
evidence of the unusual confluence of interests between superrich 
members of the new Trump administration who need to unwind complex 
financial portfolios to comply with government rules and international 
firms eager to buy American assets.

“You are not going to get an administration with thousands of political 
appointees and not have people who have contacts with the Chinese,” said 
Derek Scissors, a China specialist at the American Enterprise Institute, 
a conservative-leaning research organization in Washington.

Still, he said, no one should have any illusions about the Chinese 
motivation behind such deals. “HNA is looking for influence in an 
administration that looks like it is positioning itself to be 
anti-China,” he said. “They all are.”

Previous administrations have rarely faced such issues, partly because 
the surge of Chinese investment in the United States is relatively 
recent. Chinese companies are on a buying spree, investing about $50 
billion in American companies and projects last year alone. HNA Group, a 
conglomerate focused heavily on aviation, burst onto the American 
business scene last year when it bought a quarter of the hotelier Hilton 
Worldwide Holdings for $6.5 billion, and paid $6 billion for the 
information technology giant Ingram Micro.

Last year, Anbang Insurance Group, a Chinese financial colossus, began 
negotiating an investment in a Manhattan apartment tower owned by the 
family business of Mr. Trump’s son-in-law, Jared Kushner. Mr. Kushner, 
36, is now one of the president’s most influential advisers, with a 
White House portfolio that is expected to include handling America’s 
relationship with China. Mr. Trump has taken a hawkish stance toward 
China, threatening to raise tariffs on Chinese imports, and demanding 
that China abandon the artificial islands it has built in the South 
China Sea in an attempt to bolster its claim to the vast area.

Compared to Mr. Kushner, who still has some ties to his family’s real 
estate empire, Mr. Scaramucci appears to be making a clean break from 
his business, SkyBridge Capital. Although the sale price could rise as 
high as $230 million, depending on the company’s future performance, Mr. 
Scaramucci’s payment is fixed, he said in an interview on Monday.

HNA is a newcomer to the asset management field in the United States, 
and companies like SkyBridge — so-called funds of funds that act 
essentially as middlemen investing clients’ money in hedge funds — have 
experienced pain in recent years. Citing high fees and disappointing 
performance, investors have withdrawn billions from such firms. 
SkyBridge’s asset pool has shrunk by more than $2 billion since 
mid-2015, and its flagship fund posted its second straight year of 
negative returns in 2016.

While Mr. Kushner’s negotiations with Anbang apparently raised few 
eyebrows in Mr. Trump’s inner circle, some White House officials appear 
to view Mr. Scaramucci’s sale of his firm to HNA with more suspicion. 
Mr. Scaramucci was left out of the group of about two dozen White House 
aides who were sworn in on Jan. 22.

One White House official cited concerns that it could take as long as 
three months for the SkyBridge deal to close and be approved by the 
ethics office. Mr. Scaramucci’s lawyer said this period of time was 
standard for any large, complex deal.

A White House spokesman did not comment on Mr. Scaramucci’s status.

Allies of Mr. Scaramucci’s said the sale of his company was a red 
herring, and attributed the delay in his swearing-in to objections from 
Reince Priebus, the White House chief of staff, who they said had not 
favored giving Mr. Scaramucci a White House position. Mr. Priebus’s 
allies denied that.

In an interview, Mr. Scaramucci rejected any notion that HNA was seeking 
a friend in the administration, saying that his company was a highly 
attractive investment and that HNA was a logical buyer. HNA has 
described the purchase as an important toehold in the American market 
for its growing asset management businesses.

Even if HNA was hoping for influence, Mr. Scaramucci said, he has walled 
himself off from any discussions with the Chinese company. David Boies, 
his lawyer, said Mr. Scaramucci went well beyond what was required to 
rule out any perception of a conflict of interest.

“They know they cannot talk to me, so what influence are they buying?” 
Mr. Scaramucci said in the interview. “If people are saying that HNA is 
trying to buy access, then people are saying HNA is stupid.”

“I took their bid because it would protect my clients, partners and 
investors,” he said. “So what did I do wrong?”

An irrepressible self-described “diva” nicknamed “the Mooch,” Mr. 
Scaramucci, 53, is as outspoken as HNA’s owners are tight-lipped. His 
support for Mr. Trump in the Republican primaries came late, and only 
after he initially attacked Mr. Trump as a “hack politician” with “a big 
mouth.” He first backed Scott Walker, the governor of Wisconsin, and 
then Jeb Bush, the former Florida governor.

Still, he was one of the first Wall Street financiers to sign up with 
Mr. Trump’s campaign, and has been a relentless cheerleader for him 
since May, using the blunt, colorful speech that made him a frequent 
news show guest. At a national business conference sponsored by 
SkyBridge in May, Mr. Scaramucci said that Mr. Trump was only “saying 
cuckoo-la-la things” because he knows that “the red-meat-eating Middle 
American loves the swipes at the know-it-alls.”

Analysts of Chinese politics and strategy say the ties between 
administration officials and companies like Anbang and HNA bear careful 
watching, because while such firms are ostensibly privately owned, their 
very survival depends on the good will of the Chinese government.

“They will do, and they have time and time again done, many, many things 
at the behest of the Chinese government,” said Victor Shih, a professor 
of political science at the University of California, San Diego who 
specializes in the nexus between business and politics in China.

And few private companies have as obvious ties to the Chinese government 
as HNA, whose connections rival even those of Anbang, whose chairman 
married the granddaughter of Deng Xiaoping, China’s former paramount leader.

Faxes and emails sent to HNA press offices in Beijing and in Hainan were 
not responded to, and phone calls were not answered. A company spokesman 
in the United States declined to comment for the record.

Chen Feng, the firm’s chairman and founder, has the Chinese political 
titles that are the equivalent of a peerage or knighthood. He has been a 
delegate since 2002 to the high-level Communist Party conclaves held 
every five years that pick the country’s leadership, a streak almost no 
other private company executive can match.

While HNA’s ownership structure is murky, it has paired with a company 
run by the son of a former member of the party’s top ruling body, the 
Politburo Standing Committee. In 2008, HNA formed a venture in the 
northern city Tianjin with Womei Investment Management, part of a group 
of firms led by a son of He Guoqiang, then the Communist Party’s 
powerful discipline chief, Chinese corporate records show.

With more than $90 billion in assets, HNA has been showered with cheap 
loans that have helped fuel its overseas purchases. The amounts are 
extraordinary for a private company.

HNA Group’s biggest lenders are two government policy banks, followed by 
a gaggle of state-owned commercial banks that as of the end of 2015 gave 
HNA a combined $67.4 billion line of credit, according to a bond prospectus.

One major shareholder, Guan Jun, who records show may indirectly own 
more than a quarter of the company, lists his address in a rundown 
apartment block in Beijing. In the filthy hallway outside his door, a 
decaying bed lies upright, a bag of trash suspended from its frame.

Some in Mr. Trump’s inner circle argued that Mr. Scaramucci’s skills as 
a salesman made him the perfect fit to head the White House Office of 
Public Liaison. Mr. Scaramucci said he was so eager to serve his 
government that he took the job for $1 a year and gave up a “phenomenal” 
company.

Mr. Scaramucci, who had a controlling interest in the firm, said three 
other entities bid for SkyBridge besides HNA, including one that offered 
him more money but would have laid off 40 employees. HNA, which teamed 
up with a second firm to buy the company, will become its majority owner.

Whether selling his firm to join the White House will prove a wise move 
still seems uncertain. “Why are people so stupid to blow up their lives 
to serve the country they love?” Mr. Scaramucci said in the interview on 
Monday.

“Maybe that is the story you should be writing.”

Maggie Haberman contributed reporting.




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