Top US banks helped China military-linked firm raise billions, alleges Congressional probe
Washington, May 22
Two American banks helped Chinese battery giant raise billions of dollars months after the US government designated it a "Chinese military company", according to a new congressional investigation that accused major Wall Street banks of putting profits ahead of national security concerns.
The report by the House Select Committee on the Chinese Communist Party said the two American banks (JP Morgan Chase and Bank of America) underwrote Contemporary Amperex Technology Co. Ltd. (CATL)'s initial public offering on the Hong Kong Stock Exchange in May 2025 despite warnings from the Department of War and bipartisan concerns over the company's alleged links to China's military and forced labour networks in Xinjiang.
"My committee's investigation calls for serious policy changes to ensure what JPMorgan and Bank of America did never happens again. American banks must not help Chinese military companies raise money, because in doing so, they provide not only access to funding, but also legitimacy and credibility to companies that are helping our adversary build up its military," Select Committee Chairman John Moolenaar said in a statement.
CATL, the world's largest battery manufacturer, was placed on the Pentagon's Section 1260H list in January 2025 over alleged participation in China's military-civil fusion strategy, it said.
The report alleged both banks relied heavily on CATL's assurances that the designation was "erroneous" and accepted the company's denial that it had links to the Chinese military. Congressional investigators said CATL failed to fully answer due diligence questions regarding ties to the People's Liberation Army, dual-use technologies and military-linked entities.
According to the report, Bank of America's third-party due diligence relied on unnamed sources, including "a China-based 'new energy academic'" and "a Chinese EV data provider", while JPMorgan concluded CATL did not have transactions involving "military items or 'dual use' goods or technology".
The Select Committee also alleged CATL maintained corporate and commercial ties with several Chinese entities already under US restrictions, including Huawei, China State Shipbuilding Corporation, NORINCO and China Mobile. Investigators further claimed CATL held a stake in Wuhu Shipyard, described in the report as a defence-linked Chinese shipbuilder serving China's naval sector.
The report further accused the banks of ignoring evidence linking CATL's supply chain to forced labour concerns in Xinjiang. Investigators said CATL refused to provide full supply chain audits, but the banks still accepted the company's assurances that there were "no connections to forced labour".
In a separate case, the committee examined Morgan Stanley's role in sponsoring the Hong Kong IPO of Zijin Gold International, a subsidiary of Zijin Mining Group, whose parent company and subsidiaries had been added to the Uyghur Forced Labor Prevention Act Entity List.
The report said Morgan Stanley internally acknowledged the UFLPA designation but proceeded after senior executives approved the transaction because "it was legal". Congressional investigators said Morgan Stanley estimated fees from the deal at between $15.5 million and $23.1 million.
The committee recommended legislation prohibiting US financial institutions from underwriting or sponsoring capital raising for blacklisted entities linked to foreign adversaries. It also called for CATL and its subsidiaries to be added to the Treasury Department's Non-SDN Chinese Military-Industrial Complex list.
— IANS
Reader Comments
As an American, this is deeply troubling. Our financial institutions are supposed to safeguard our interests, not enable our strategic competitors. The fact that they relied on CATL's empty promises while ignoring red flags shows how corrupted our system has become.
While I understand US concerns about military links, I find it ironic that American banks are being criticized for doing what banks do - make money. The real issue here is the US trying to contain China's technological rise. CATL makes the best batteries in the world, and that threatens American dominance. Simple as that! 😏
Interesting how the US keeps targeting Chinese companies while their own banks are the ones facilitating these deals. The forced labour allegations in Xinjiang are serious, but using them as a geopolitical weapon while ignoring your own corporate complicity is peak Western diplomacy. India should watch closely and learn from this game.
The $15-23 million in fees Morgan Stanley pocketed explains everything. When there's that much money involved, ethics take a backseat. But honestly, isn't this how global capitalism works? Everyone points fingers, pockets are lined, and the cycle continues. The committee's recommendations are good, but will anyone actually follow them? 🤔
This is exactly why we need stronger oversight of Wall Street. JPMorgan and Bank of America actively ignored credible warnings about military links and forced labor. The "it was legal" excuse is pathetic - just because something is technically legal doesn't make it right. Americans should be furious.
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