US Lawmaker Challenges Morgan Stanley Over Chinese IPO Tied to Forced Labor

Chairman John Moolenaar questions Morgan Stanley's role in underwriting Zijin Gold's IPO amidst forced labor concerns, urging scrutiny of US financial ties with such companies. He highlights risks to investors and past human rights violations by Zijin Mining. Subpoenas for related documents from other financial giants follow.

Chairman John Moolenaar, a Michigan Republican and head of the Select Committee on China, has penned a letter to Morgan Stanley CEO Ted Pick, seeking clarity on the bank's role in the initial public offering (IPO) of Zijin Gold International Company. This subsidiary of Zijin Mining Group is currently on the US government's Uyghur Forced Labor Prevention Act (UFLPA) Entity List, according to a press release from the Select Committee on the Chinese Communist Party (SCCCP).

Moolenaar stated, "When American financial institutions partner with Chinese companies associated with Uyghur forced labor, they undermine the US government's efforts to curb forced labor worldwide. By enabling these businesses to access global capital markets, US underwriters are allowing them to broaden their operations and increase their engagement in forced labor, which directly opposes the intentions of US law," as noted in the SCCCP release.

He sharply criticized Zijin Mining's record on human rights, citing allegations against the firm from Xinjiang to Serbia and Colombia. Moolenaar pointed to Morgan Stanley's underwriting of Zijin Gold's IPO as emblematic of activities the US seeks to prevent. "Morgan Stanley exposes itself and its US investors to significant risks regarding regulatory compliance, financial stability, and reputation," he said, citing SCCCP materials. In July, the committee also subpoenaed documents from JPMorgan and Bank of America over their involvement with a Chinese military-linked company, CATL, indicating a broader concern with US financial entanglements with firms connected to the Chinese government.

(With inputs from agencies.)