House Financial Services Subcommittee Issues Testimony From United Food & Commercial Workers International Union Senior Research Analyst Alexander
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My name is
In the last few years, scrutiny into
1. Your passage of the Holding Foreign Companies Accountable Act, requiring listed companies to permit inspections of their audits, a longstanding obstacle for investors in Chinese companies listed in the
2. The resulting
3. Presidential Executive Order 14032 which bans
4.
Much of the engagement around investments in Chinese companies is guided by what is visible in publicly traded companies. What is less visible, but no less important, is the trove of investments made by
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1 https://www.sec.gov/news/statement/gensler-audit-firms-china-hong-kong-20220826
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Let me present a case study of one such investment based on our research.
Between 2007 and 2018,
At launch, Cue was described by KKR as "...the first one-stop digital marketing company for the Chinese market."/4
Until
KKR's "digital marketing company" went on to jointly develop surveillance technology with an arm of the Ministry of Public Security, the government organ that oversees
In 2020, Cue had jointly developed technology for a surveillance product with the Video National Engineering Laboratory Zhuhai Innovation Center ("Zhuhai Innovation Center"), a government lab run by the
The Zhuhai Innovation Center and the
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2 https://www.businesswire.com/news/home/20180320006664/en/KKR-Launches-China%E2%80%99s-First-One-Stop-Digital-Marketing-Company-Cue-Co. "KKR has been investing in
5 https://cue.group/news/index.html 20200402, accessed 7/3/21, professional translation. Web posting was removed following publication of The Wire China report. "'CUE All-in-One Machine', which has two core capabilities of AI smart contact-free temperature measurement and 14-day migration trajectory tracking, was an epidemic prevention product jointly and urgently researched and developed by
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The jointly-developed product was called the "CUE Real-time AI Facial & Body Temperature Detector" or
In
More recently, on
Pandemic surveillance has not been a benign government function in
Additionally,
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6 https://cue.group/news/index.html 2020 04 02, accessed 7/3/21, professional translation. Web posting was removed following publication of The Wire China report. "'CUE All-in-One Machine', which has two core capabilities of AI smart contact-free temperature measurement and 14-day migration trajectory tracking, was an epidemic prevention product jointly and urgently researched and developed by
7 https://cue.group/news/index.html 2020 08,04, accessed 7/8/21, professional translation. Website has been removed. "During the epidemic, 'CUE Real-time AI Facial & Body Temperature Detector' served government agencies, businesses, communities, schools, restaurants, shopping malls, train stations, bus stations and other places all over the world, provided safety protection for tens of millions of people during their daily activities."
8 https://cue.group/#/newsdetails?id=articleDetial9abbe02cc4868d83 , post dated 6/7/2022, accessed 8/30/2022, Google translate. Website has been removed.
10 https://www.nytimes.com/2022/01/30/world/asia/covid-restrictions-china-lockdownhtml?searchResultPosition=1 https://www.voanews.com/a/reports-chinese-authorities-using-covid-tracking-app-to-thwart-protesters-/6619689html https://www.cnn.com/2022/06/15/china/china-zhengzhou-bank-fraud-health-code-protest-intl-hnk/indexhtml
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According to that article, Zhuhai Zhongdun Star Technology had participated in the government's "Safe Campus" surveillance project starting in 2018./12
According to a 2020 Xinhuanet.com article, "
Importantly, KKR listed Cue and Zhuhai Zhongdun Star Technology as "indirect subsidiaries" of KKR in a German regulatory filing dated
Further documenting the entangled nature of Cue and
On
I have submitted that publication with my written testimony.
Why does a collaboration with the Zhuhai Innovation Center matter?
The Zhuhai Innovation Center was formed in 2019 by the
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11 https://tech.chinadaily.com.cn/a/201910/28/WS5db690e7a31099ab995e8371.html dated 10/28/2019, professional translation: "
12 https://tech.chinadaily.com.cn/a/201910/28/WS5db690e7a31099ab995e8371.html dated 10/28/2019,
13 http://www.xinhuanet.com/info/2020-10/28/c139470907.htm Professional translation with the letters DNA in the Chinese original. 10/28/2020.
14 https://www.bafin.de/SharedDocs/Downloads/DE/Angebotsunterlage/axelspringersedelisting.html p. 260
15 National Enterprise Credit Information Publicity System of
16 Northrop, Katrina. The Surveillance Stake, The Wire China dated
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Qiu was previously Deputy Director of the
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17 http://nelivaiczh.com.cn/ (website removed after publication of The Wire China article). About Us - Introduction of
18 http://www.neliva.com.cn/Index/lists/catid/11.html accessed
19 http://www.neliva.com.cn/Index/lists/catid/11.html accessed
20 https://home.treasury.gov/news/press-releases/sm1073
21 http://www.neliva.com.cn/Index/lists/catid/10.html accessed
22 http://www.neliva.com.cn/Index/lists/catid/11.html accessed
23 https://home.treasury.gov/policy-issues/financial-sanctions/consolidated-sanctions-list/ns-cmic-list, accessed
24 https://www.bis.doc.gov/index.php/documents/regulations-docs/2326-supplement-no-4-to-part-744-entity-list-4/file accessed
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According to a
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25
26 https://www.bis.doc.gov/index.php/documents/regulations-docs/2713-supplement-no-6-to-part-744-unverified-list/file accessed
27 http://www.cac.gov.cn/2015-06/01/c 1115476484.htm , dated 6/1/2015,
28 https://www.treasury.gov/ofac/downloads/sdnlist.pdf, accessed
29 http://www.cac.gov.cn/2015-01/21/c 1114068012.htm , dated 1/21/2015,
30 Northrop, Katrina. The Surveillance Stake, The Wire China dated
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For its part, the Zhuhai Innovation Center's website described two of its public security goals as follows: "build a three-dimensional 'Jinwan Model' for social prevention and control, establish a model for social governance in the
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31 http://nelivaiczh.com.cn/plus/view.php?aid=14 , Zhuhai Innovation Center website, Inauguration announcement, dated 3/17/2020, accessed 6/1/2021, professional translation. Website no longer accessible.
32 http://nelivaiczh.com.cn/plus/view.php?aid=14 , Zhuhai Innovation Center website, Inauguration announcement, dated 3/17/2020, accessed 6/1/2021, professional translation. Website no longer accessible.
33 http://nelivaiczh.com.cn/ Zhuhai Innovation Center website, About Us. Accessed 8/19/2021, professional translation. Website no longer accessible.
34 https://www.scmp.com/news/hong-kong/law-and-crime/article/3086783/chinas-public-security-ministry-vows-fully-guide-hong
35 https://www.state.gov/risks-and-considerations-for-businesses-operating-in-hong-kong/
36
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In response to our research, KKR told myself and colleagues that the firm tries to ensure that it does not invest in "surveillance capitalism", that it conducts "very careful screening with respect to every investment we make on issues of both privacy, surveillance, as well as geopolitics" and that former Gen.
Cue's surveillance and advertising business paid its investors well. In
KKR Asian Fund III investors include public employee pension funds, like
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37 https://cue.group/en/ accessed
38 Notes, conversation
39 Singapore Corporate Registry,
40 Singapore Corporate Registry,
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Therefore, we urge you to give public pension funds, our regulators and American citizens the tools to hold private equity accountable to our own national security and human rights interests by mandating public disclosure of all subsidiaries and investments in countries of national security concern.
One last point about public disclosure: the information used to uncover the Cue story was all public information, required by other countries in which KKR does business. KKR filed a list of indirect subsidiaries in
Thank you for the opportunity to address you on this matter.
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Original text here: https://financialservices.house.gov/uploadedfiles/hhrg-117-ba16-wstate-alexanderc-20221115.pdf
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