Morgan Stanley’s underwriting of Zijin Gold International’s Hong Kong IPO has come under scrutiny by a U.S. House of Representatives committee, citing risks of regulatory, financial, and reputational harm for the bank and its U.S. investors. Zijin Gold, a subsidiary of Zijin Mining Group, a global mining company based in China, is on a U.S. government list of companies banned for alleged human rights abuses involving Uyghurs.
In September, Morgan Stanley assisted with Zijin Gold’s IPO to help its parent company raise funds by selling its non-Chinese gold mining assets and listing them on the Hong Kong Stock Exchange. The House’s select committee on China raised concerns about whether this assistance helped Zijin Mining evade U.S. prohibitions.
Representative John Moolenaar, the committee’s chair, emphasized the detrimental impact of U.S. financial institutions engaging with Chinese firms linked to Uyghur forced labor. He wrote a letter to Morgan Stanley CEO Ted Pick expressing concerns about undermining the U.S. government’s goal of deterring forced labor globally.
Zijin Mining was added to the Uyghur Forced Labor Prevention Act Entity List in January, restricting imports tied to what the U.S. describes as an ongoing genocide of minorities in China’s Xinjiang region. U.S. officials allege that Chinese authorities have established labor camps for Uyghurs and other Muslim minority groups in Xinjiang, a claim that Beijing denies.
Moolenaar’s letter to Morgan Stanley requests documents and communications related to the company’s involvement in the public offering, particularly concerning its links to the Chinese government, Chinese Communist Party, military, and human rights abuses. The committee asked for this information by November 27 as part of its ongoing investigation into U.S. financial institutions’ roles in underwriting IPOs of Chinese companies with ties to the Chinese military or illegal labor practices.
This recent development follows similar actions taken by the committee, including subpoenas issued to JPMorgan and Bank of America in July over their roles in underwriting the Hong Kong IPO of China’s CATL, the world’s largest electric vehicle battery maker, designated a Chinese military company by the U.S. Department of Defense.
As the investigation unfolds, the implications of financial institutions’ involvement with companies tied to human rights abuses or military connections in China continue to be a focal point for regulatory scrutiny. Stay tuned for updates on this developing story.
(Reporting by Karen Freifeld in New York and Kanishka Singh in Washington; Editing by Jamie Freed)
