Hunter Biden holds a stake in a Chinese surveillance company that is under U.S. sanctions for human-rights violations, complicating his father Joe Biden’s campaign promise to crack down on American businesses with financial ties to China’s humanitarian abuses.
Bohai Harvest RST Shanghai Equity, an investment firm that Hunter Biden owns a stake in, initially invested in Megvii, a sanctioned Chinese tech company that specializes in facial recognition software, in 2017, according to the company’s website. The firm holds a nearly 2 percent stake in Megvii through two holding companies, according to a prospectus filed by Megvii as part of its application for a listing on the Hong Kong stock exchange last year.
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Last year, the U.S. Department of Commerce added Megvii to its list of sanctioned entities that were "implicated in human-rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups."
Hunter Biden’s foreign business dealings have been a point of contention throughout his father’s campaign. Ethics watchdogs have raised questions about Hunter Biden’s lucrative positions with Ukrainian energy company Burisma while Joe Biden was overseeing Ukraine policy as vice president. Hunter Biden has also faced criticism for partnering with the state-run Bank of China to launch a Chinese investment firm. But in this instance, Hunter Biden's business deals are not just representative of nepotism or a conflict of interest—Joe Biden has promised to go after companies like the one his son is invested in.
In July, Biden vowed that he would "prohibit U.S. companies from abetting repression and supporting the Chinese Communist Party’s surveillance state." Last week, the Biden campaign called China’s assault on the Uighurs "genocide" and called on President Donald Trump to "take action."
Hunter Biden stepped down from the board of Bohai Harvest RST, which he co-owned, earlier this year, but he still owns a 10 percent stake in the investment firm through his U.S.-based limited liability company Skaneateles LLC, according to corporate records from China’s official company database. Hunter Biden’s continued investment in the firm was previously reported by the Daily Caller and the Washington Examiner.
Megvii told the Washington Free Beacon that it doesn't believe any of the actual capital behind BHR's investment came directly from Hunter Biden or individuals in the United States, according to information it received from BHR. A spokesperson for Megvii declined to provide additional details on the record.
"The two BHR special purpose vehicles (SPVs) that invested in Megvii, BHR Investment Fund II and BHR Investment Fund VI, are capitalized by a small group of Chinese investors," said a spokesperson for Megvii. "There is no U.S. investment in either of the SPVs, including funds originating with Hunter Biden, according to BHR materials provided to Megvii."
While Hunter Biden has no legal obligation to divest from the entity, human-rights activists said foreign investors are essentially aiding Chinese persecution of the minority Uighur population by financing companies that have been implicated in human-rights abuses.
Ryan Barry, project coordinator with the World Uyghur Congress, said U.S. investors "absolutely" have an ethical obligation to divest from companies linked to China’s persecution of the Uighurs.
"If you invest in these companies, you’re profiting off the suffering of the Uighur people," he said. "It’s unethical to do this."
Chinese surveillance and facial recognition companies play a key role in the government’s oppression of ethnic minorities, according to Peter Irwin, senior program officer with the Uyghur Human Rights Project.
"Surveillance is central," said Irwin. "Chinese surveillance companies have been totally enabling the Chinese government to do what it’s doing."
"Where Megvii and these facial recognition companies come in is they analyze the data and they spit out some sort of algorithm" to determine whether individuals under surveillance should be detained, said Irwin. He said the Chinese government has been systematically targeting Uighurs through a program of high-tech surveillance, reeducation and forced labor camps, and other repressive security measures.
Megvii has denied its involvement with state security, and last summer Human Rights Watch retracted part of a report that claimed to find source code evidence linking Megvii to police surveillance technology used against the Uighurs.
But months later, the U.S. Department of Commerce added Megvii to its list of designated entities for "enabling activities contrary to the foreign policy interests of the United States," specifically on human-rights violations.
Lori Scheetz, an attorney at Wiley Rein, said American investors are not required to divest from companies on the Department of Commerce sanctions list, noting that the restrictions primarily apply to U.S. exports.
Scheetz said she expects the U.S. government to add more Chinese entities to the Treasury Department’s sanction list in the near future, a designation that could require some American investors to "be removed, or walled off [from the investments], or the fund would need to divest from the sanctioned entity."
"I think there likely will be more [Treasury] sanctions or [Commerce Department] designations," she said. "Clearly the U.S. is focused on human-rights violations against the Uighurs."
Update 6:33 p.m.: This post has been updated with comment from Megvii.