Commerce Secretary Gina Raimondo and her husband own a financial stake in WeChat’s parent company, Tencent Holdings, through a publicly traded fund. The most controversial aspect of the matter is that the Department of Commerce is in charge of reviewing the ban on the Chinese tech giant imposed by former President Donald Trump.
According to a financial disclosure filed with the Office of Government Ethics (OGE), Raimondo and her husband jointly own shares of two emerging markets exchange-traded funds (ETFs), which are composed of several foreign stocks, including Tencent Holdings. In total, the couple’s position in the two ETFs is worth between $365,000 and $750,000. The exact amount is not provided in the OGE filing.
Potential conflict of interest for Raimondo
As reported by the Daily Caller, the newly confirmed commerce secretary promised to divest other financial positions, citing potential conflicts of interest, but did not mention divesting her stake in Tencent Holdings.
Upon inquiry by The Daily Caller to Project on Government Oversight general counsel Scott Amey, disassociated himself from the matter and recommended that Raimondo should consult with an ethics official to determine whether her investment represents a conflict, and “step aside if necessary.”
Tencent Holdings investment
President Joe Biden’s administration is conducting a broad review of pending executive orders from the previous administration related to Chinese Communist Party (CCP), including an executive order signed in August banning transactions with Tencent Holdings, parent company of WeChat and TikTok. The Department of Commerce is precisely in charge of assessing this situation.
Federal ethics law prohibits government employees from participating in official matters in which they have a financial interest, so Raimondo’s holdings in Tencent could be a serious conflict of interest.
The executive order signed by former President Trump, dictates a ban on transactions by TikTok, WeChat, and its parent company Tencent Holding, but without detailing the implications of the broad concept “transaction.”
Trump’s executive order made clear his administration’s interest in disrupting key aspects of the operations and funding of firms of Chinese origin and linked to the Chinese Communist Party (CCP) and its intelligence system, amid concerns about the security of personal data handled by the app.
The document states that the “prohibited transactions” include, for example, agreements that allow the app to be available in app stores today, or to buy advertising on TikTok, making advertising on the platform illegal.
These measures could completely cripple the app’s funding and growth in the United States. “That kills TikTok in the United States,” James Lewis told Reuters, a cybersecurity expert at the Washington-based Center for Strategic and International Studies. “If they want to grow, these rules are a big obstacle.”
It was later agreed, that the app could only continue to be used in the United States if the app is sold to some local firm.
Then, with the change of administration, the resolution of the conflict was left inconclusive and we wait for the verdict of the Department of Commerce to know how it will be resolved.