U.S. lawmakers are investigating whether the Chinese government is attempting to control one of America’s beacons of free market capitalism: Forbes Global Media Holdings.
Republicans on the House Permanent Select Committee on Intelligence began investigating the issue late last year, according to government documents obtained by The Washington Times.
Forbes Global Media Holdings denies the intelligence committee has singled it out. A spokesman for the company told The Times that any suggestion of Chinese government influence over Forbes’ operations is “completely unfounded.”
Some committee Republicans grew concerned last year over the prospect of such influence as executives at the New Jersey-based publisher of Forbes magazine worked on a deal with a China-based special acquisition firm, or SPAC.
That company, Magnum Opus Acquisition Ltd., reportedly received funding from an entity run by the Chinese Communist Party.
In a Nov. 23 letter to Forbes CEO Mike Federle, Republicans on the intelligence committee asked the company to assist in an “investigation related to China’s malign influence activities against U.S. corporations.”
“It is essential for you to be informed of any malign influence efforts related to your company and how such efforts impact American economic and security interests,” Rep. Devin Nunes, California Republican, wrote in the letter, a copy of which was obtained by The Times.
Mr. Nunes, the intelligence committee’s ranking Republican at the time, has since retired from Congress.
A committee source who confirmed the authenticity of the letter told The Times that the investigation is continuing under Rep. Michael Turner of Ohio, the current ranking Republican.
The November letter and a lengthy response that Forbes Global Media Holdings provided to the committee in December have not previously been reported.
An examination of documents by The Times gave no indication that the Securities and Exchange Commission, which is reviewing the proposed Magnum Opus deal with Forbes, has been formally notified about the intelligence committee investigation.
Under the $630 million deal, which Forbes announced in August, the iconic business media brand would transition into a publicly traded company on the New York Stock Exchange as part of a merger with the Hong Kong-based Magnum Opus.
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SPACs, which have been in vogue on Wall Street, are companies that have no operations of their own but are formed to raise money through initial public offerings expressly for the purpose of buying or merging with existing companies.
Magnum Opus is identified as a SPAC that received some of its initial financing from the Chinese government. According to SEC filings, China’s sovereign wealth fund, China Investment Corp., provided institutional seed money for the company.
A March 2021 SEC filing described China Investment Corp. as “a wholly state-owned company incorporated under the laws of the People’s Republic of China.”
With total assets worth more than $1 trillion, China Investment Corp. is one of the world’s largest sovereign wealth funds.
Some in the national security community question whether the entity is a conduit through which the ruling Communist Party seeks to wield influence over Chinese financial firms investing in public and private companies around the globe.
Such influence appears to be increasing in Hong Kong. China’s ruling communists in recent years have imposed political crackdowns and harsh media restrictions on the formerly autonomous, pro-democracy city-state.
SEC filings show that China Investment Corp. owned a roughly 5.8% stake in Magnum Opus when the deal with Forbes Global Media Holdings was announced, although the filings also show that China Investment Corp. has since disposed of its shares.
Reports maintain that Magnum Opus has since raised funding for the Forbes deal from more than a dozen other investors.
DailyMail.com reported last month that Magnum Opus had raised $400 million for the deal from 19 investors, most of whom are based in Hong Kong or elsewhere in China.
The prize of Forbes
Forbes has an average of nearly 115 million monthly users of its various internet platforms and publishes a printed magazine with an audience of at least 6 million. The magazine is known for its promotion of free market capitalism. Its ad campaigns for many years jokingly described the publication as a “capitalist tool.”
The publication was founded more than a century ago by Scottish immigrant newspaperman B.C. Forbes. It is perhaps best known today for its pro-capitalist rankings, such as the “30 under 30” list of richest young Americans.
Steve Forbes, a grandson of the company’s founder and a former Republican presidential contender, is listed as the editor-in-chief of Forbes Media on the website of Forbes magazine. Randall Lane is listed as the chief content officer.
Mr. Forbes did not respond to a request for comment for this article.
Forbes Global Media Holdings announced the pending Magnum Opus deal on the magazine’s website in August as a transaction that “will enable Forbes to further capitalize on its successful digital transformation, using technology and data-driven insights to create more deeply engaged audiences, and associated high-quality and recurring revenue streams.”
Others have questioned the transaction.
“This deal raises serious and grave concerns about Forbes, which is truly the mouthpiece of democracy and capitalism and is effectively being taken over by the Chinese,” a senior source at Forbes told DailyMail.com last month.
Forbes Chief Communications Officer Bill Hankes sharply disputed that sentiment when The Times asked for comment.
“Forbes is and always will be fiercely independent, and any suggestion that the Chinese or any other government would have any influence is completely unfounded,” said Mr. Hankes, who also dismissed the view that Republicans on the House intelligence committee have targeted Forbes for investigation.
Mr. Nunes’ November letter was merely a “general inquiry,” Mr. Hanks said in an email to The Times, and Forbes Global Media Holdings has had no correspondence with the committee since it responded to the letter in December.
In announcing the Magnum Opus deal, Forbes Global Media Holdings said the entire management team of Forbes would run the company.
Concern about Chinese influence over Forbes began as far back as 2014, when a Hong Kong-based investment group called Integrated Whale Media Investments bought a majority stake in Forbes.
A December 2017 op-ed in The Washington Post by China expert and author Isaac Stone Fish said the purchase was followed by “several instances of editorial meddling on stories involving China.”
Mr. Fish pointed specifically to Forbes’ decision that year to discontinue publishing articles by Communist Party critic Gordon Chang. Mr. Fish also noted the case of former Forbes contributor Anders Corr, who said a Forbes editor emailed him in 2016 saying it was “not accurate to say China impoverishes its people or to label [Chinese President] Xi Jinping a dictator.”
Intelligence committee probe
The accusations of influence at Forbes have factored into the House Republicans’ investigation into the publication’s dealings with Chinese companies.
Mr. Nunes raised the issue specifically in his Nov. 23 letter, which included more than two dozen questions about Forbes’ policies for protecting against Chinese government influence.
“Since the 2014 purchase of Forbes by Integrated Whale Media, there have been accusations of censorship against China critical narratives and retaliation against employees who produce them,” Mr. Nunes wrote. “Have you investigated these accusations?”
On Dec. 16, Forbes’ legal team at Holland & Knight responded to the intelligence committee by saying such “accusations have been investigated and are not based in fact,” according to a copy of the document obtained by The Times.
The response, marked “CONFIDENTIAL,” says Forbes “decided to phase out its ‘Opinion’ channel to focus more on fact-based policy reporting” in 2017. It said “a contributor named Gordon Chang was cut as part of this process.”
It also said Forbes removed a post by Mr. Corr in 2017 “because it was poorly executed” and that his term as a contributor ended “due to a history of reporting that did not meet Forbes’ standards.”
Mr. Hankes, the chief communications officer at Forbes, told The Times that the magazine “continues to publish articles critical of China that are readily available online.”
He pointed to the example of a Forbes article in January that highlighted abuses of press freedom in China. The article focused on a list of abuses presented by the “One Free Press Coalition” ahead of the Winter Olympics in China.
Topping the list was the case of Hong Kong media entrepreneur and democracy advocate Jimmy Lai Chee-ying, who was arrested and jailed as part of a Chinese crackdown on political and media freedoms in Hong Kong.
In addition to questions about Forbes articles on China, the Nunes letter sought information about whether anyone from Forbes had interacted with Chinese government officials, most notably from the State Council in Beijing.
The council oversees China Investment Corp., which provided initial funding for Magnum Opus.
“Has anyone from Forbes ever had a meeting with anyone from the Chinese State Council Information Office? If so, who and what was the context?” Mr. Nunes asked.
Forbes responded through Holland & Knight’s letter that “to the best of the company’s knowledge, no person at Forbes has met with anyone from the Chinese State Council Information Office.”
A source familiar with the correspondence said it has been shared with the Treasury Department’s Committee on Foreign Investment in the United States, a multiagency executive branch investigative arm that examines foreign entities’ takeovers or purchases of U.S. companies for national security questions.
The Treasury committee did not respond to a request for comment from The Times.
The SEC declined to comment, although SEC Chairman Gary Gensler recently raised concern about Chinese companies trading in U.S. capital markets in general.
Mr. Gensler suggested in a September op-ed published by The Wall Street Journal that his primary concern is less about Chinese government influence than a potential lack of transparency in Chinese companies that engage in deals with U.S. companies and investors.
“I don’t believe China-related companies currently are providing adequate information about the risks they face — and thus the risks that American investors in these businesses face,” Mr. Gensler wrote. He added that many Chinese companies “establish contractual relationships with shell companies in foreign jurisdictions, like the Cayman Islands,” which in turn raise capital on U.S. stock exchanges without “actually confer[ring] ownership of the operating company to American investors.”
“I worry that some investors don’t realize they’re putting their money into a Cayman shell rather than a company operating in China,” he wrote.
Whether the SEC approves the Magnum Opus deal with Forbes remains to be seen.
Filings indicate that a late-March deadline for Magnum Opus to complete the acquisition and take Forbes public could be extended if the SEC has not approved the deal by then.
Magnum Opus did not respond to a request for comment.
• Joseph Clark contributed to this report.
• Guy Taylor can be reached at email@example.com.
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