Chinese communist party-linked outfit looking to buy Forbes magazine.

Should we concerned? Will it become a spigot for the Chinese Communist Party propaganda?

Four senators are. Senators Tom Cotton (R-Arkansas), Bill Cassidy (R-Louisiana), Bill Hagerty (R-Tennessee), and Ted Cruz (R-Texas) wrote to Treasury Secretary Janet Yellen about their worries about the proposed acquisition of Forbes by Magnum Opus Acquisition Limited.

Sounds like just another acquisition or merger that are always going on in the corporate world, right?

Except for this. As the senators said in their letter to Treasury Sec. Janet Yellen (full letter at the end).:

“China’s deliberately vague patchwork of intelligence, national security, and cybersecurity laws compel companies to support and cooperate with the government’s intelligence work. Not only is Magnum Opus domiciled within the jurisdiction of the Chinese Communist Party (CCP), but the seed money for Magnum Opus came directly from China’s sovereign wealth fund, the Chinese Investment Corporation (CIC).” 

The deal has been in the works since August 2021, but who has noticed? In the announcement, Forbes foresees a cash infusion that will allow it to grow its digital platform and other businesses. The announcement says that the operation will remain in the hands of the current management.

Fair enough, although I’ve never seen an acquired company retain its most senior executives. I’ve lived through this myself.

But the acquisition does raise important public policy questions. Should a foreign entity, especially a particularly unfriendly one, be allowed to buy and control an American publication? Certainly Conrad Black’s (Canadian) and Rupert Murdoch’s (Australian) separate acquisitions of the Chicago Sun-Times wasn’t concerning because they are our English-speaking allies.

Yet, it is concerning enough for the four senators. They have introduced legislation,  the “Foreign Merger Subsidy Disclosure Act, legislation that would require companies to disclose financial support from adversarial foreign governments and entities in premerger notification filings to U.S. antitrust regulators.”

Cotton said: :

The Chinese Communist Party is attempting to gain power by manipulating the market and undercutting American businesses. Our bill will promote transparency in antitrust filings, and allow regulators to examine whether a company may act anticompetitively because it has the backing of foreign subsidies.

The complete letter to Yellen:

The Honorable Janet Yellen
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220

Dear Secretary Yellen:

We are writing regarding the proposed acquisition of Forbes by a Chinese Communist Party-linked entity.

In August 2021, Forbes Global Media Holdings (Forbes) announced a proposed acquisition by Magnum Opus Acquisition Limited (Magnum Opus), a special purpose acquisition company (SPAC) controlled by the Chinese Communist Party. In your role as chair of the Committee on Foreign Investment in the United States (CFIUS), we urge you to investigate the circumstances and national security implications of this proposed acquisition.

China’s deliberately vague patchwork of intelligence, national security, and cybersecurity laws compel companies to support and cooperate with the government’s intelligence work. Not only is Magnum Opus domiciled within the jurisdiction of the Chinese Communist Party (CCP), but the seed money for Magnum Opus came directly from China’s sovereign wealth fund, the Chinese Investment Corporation (CIC). 

The CCP’s intent to wield the Forbes brand for its own purposes is clear. The purchasing entity’s April 8, 2022 proxy statement admits that, if this deal is allowed to proceed, Forbes “could be subject to oversight and discretion of PRC governmental authorities, which could seek to intervene or influence its business operations at any time that the government deems appropriate to further their regulatory, political, and societal goals.”  

Forbes is a recognizable American brand with immense propaganda value to the CCP. Additionally, the CCP’s direction of Forbes’ editorial content and business operations, or its access to Forbes’ financial and personal research, could present a serious national security threat to the United States. As members of the Intelligence, Judiciary, Banking, and Finance Committees, we view proposed transactions like this one as a compelling reason for increased oversight of the CCP’s predatory economic behavior in American markets. We urge you to take the necessary steps to thoroughly review the circumstances and potential consequences of this deal.

Thank you for your attention to this important matter of national security.

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