Narrative
Full Description
Project narrative
In 2015, Bank of China (BOC) issued a loan to Bohai Harvest RST (BHR) — a Chinese private equity firm jointly owned by (1) a consortium of the Postal Savings Bank of China, China Development Bank, and the Bank of China (30% stake), (2) Harvest Fund Management Co. (30% stake), (4) three other entities (10% stake each), and (4) Skaneateles LLC, a vehicle for Hunter Biden, the son of then U.S. Vice President Joseph Biden (10% stake) — to support its acquisition of a 49% stake in Henniges Automotive for $572 million USD. Henniges is a leading global supplier of automotive sealing and vibration damping systems, with revenue of US$ 825 million in 2014. Currently ranked second in the North American market, third in China, and fourth globally, Henniges provides high-quality products to major automakers including GM, Ford, Volkswagen, and BMW, as well as domestic brands such as BAIC and FAW. Henniges had 15 manufacturing plants and five engineering and technical centers with about 7,000 employees in six countries at the time of the acquisition. There were five manufacturing facilities in China, in Beijing, Changchun, Chengdu, Tianjin and Tieling. There were three facilities in Mexico, in Gomez Palacio, Torreon, and Guadalajara, and four in the United States, in Frederick, Oklahoma; New Haven, Missouri.; Reidsville, North Carolina; and Keokuk, Iowa. Other factories werein Burlington, Ontario, Canada; Hranice, Czech Republic; and Rehburg, Germany. The technical center were in Beijing; Rehburg; Viersen, Germany; Mlada Boleslav, Czech Republic; and Auburn Hills. In 2014, Henniges had sales of $825 million USD. The acquisition was announced in late June 2015 and was valued at $800 million USD when including the debt of Henniges. Littlejohn & Co. LLC was the seller. The acquisition was completed on September 10, 2015. BHR partnered with Aviation Industry Corporation of China Ltd. (which obtained a 51% stake) on the acquisition. Henniges Automotive is based in Auburn Hills, Michigan and designs and produces sealing and automotive-suspension-systems and. It also produces anti-vibration and damping technologies, which have important military uses, particularly in military aircraft. It was second in the North American market, third in China, and fourth globally. Its customers included GM, Ford, Volkswagen, BMW, BAIC, and FAW. Hunter Biden's dealings with China, among them his role in BHR, were scrutinized by conservative American politicians in the lead-up to the 2020 presidential election and during the presidency of his father Joe Biden. The acquisition of Henniges, which, given its sensitive technology had national security implications but nonetheless was approved by the Committee on Foreign Investment in the United States (CFIUS), was alleged to be an example of the then-vice president being influenced by or outright colluding with his son using his position, though these assumptions were highly contested and never proven.
Staff comments
1. AVIC's acquisition of Henniges in 2015 sparked scrutiny due to AVIC's role as a state-owned military contractor. This raised concerns about the potential for dual-use technologies, where automotive technologies developed by Henniges could be adapted for military purposes. 2. In 2019, Senate Finance Committee Chairman Chuck Grassley called for an investigation into the 2015 approval of AVIC's acquisition of Henniges, citing concerns about the potential for dual-use technology transfer. 3. Henniges called the deal "one of the largest acquisitions by a Chinese company of a U.S.-based automotive manufacturing company in history." See https://en.wikipedia.org/wiki/Henniges_Automotive 4. In August 2019, Senate Finance Committee Chairman Chuck Grassley called on the Treasury Department to investigate CFIUS's 2015 approval of AVIC's acquisition of Henniges, which, since the acquisition, opened plants in Suzhou, China; Prudnik, Poland and a European headquarters in Mladá Boleslav, Czech Republic. The U.S. alleged that state-run AVIC was involved in stealing sensitive data regarding the Joint Strike Fighter program (F-35) and later incorporated the stolen data into China's Chengdu J-20 and Shenyang FC-31 fighters. See https://en.wikipedia.org/wiki/Henniges_Automotive 5. For evidence of Bank of China's provision of an M&A loan, see https://business.sohu.com/20150918/n421425618.shtml 6. The face value of the M&A loan from Bank of China is unknown. However, given that the total cost of the acquisition was $572 million USD and Bohai's share of that was 49% and M&A loans often cover 70% of the total cost of the acquisition, AidData assumes for the time being that the face value of the loan was roughly equivalent to $196.196 million USD. This issue warrants further investigation. 7. AVIC Automotive Systems Holdings Co., Ltd. entered into a $260 million USD loan agreement in 2015 to fund its acquisition of Henniges which was guaranteed pro rata by its shareholders AVIC and Beijing E-town International Investment & Development Co., Ltd. (92.58% and 7.42%, respectively). The lender of this loan is unknown. AidData has assessed that BOC lent to Bohai or an affiliate thereof because it is described as having arranged financing for itself.