The criticism underscores how the Beijing-orchestrated dismantling of Hong Kong’s pro-democracy movement and its rollback of the rule of law in the territory blurs the line between normal foreign business operations and complicity in an increasingly abusive status quo.
U.S. companies “that trumpet their so-called ‘environmental, social and governance principles’ at home are quick to discard those ‘values’ for a chance to cash in on China,” Smith said in a statement.
Smith warned US business leaders that their future engagement with Hong Kong authorities and its Treasury Department-sanctioned leader will attract increased scrutiny in the coming year.
“Investigating the complicity of American companies in China’s repression will be a high point of the next Congress,” he said. Congressional responses could range from name-and-shame public hearings to possible steps to expand the Treasury Department’s sanctions restrictions on permitted contact with sanctioned individuals and entities.
Member of the House Financial Services Committee Blaine Luetkemeyer(R-Mo.), echoed Smith’s criticism.
“American leaders attending an event with the CCP’s so-called enforcer makes one question whether human rights are a real concern,” Luetkemeyer said. He did not say whether he would support action against the leaders.
JPMorgan Chase, Citigroup and Morgan Stanley declined to comment for this article. Goldman Sachs and Blackstone did not respond to requests for comment.
Smith and Luetkemeyer have good reason to be concerned about the optics and ethics of American companies’ dealings with Lee. As Hong Kong’s security chief, Lee oversaw brutal police responses to pro-democracy protests. His unquestioning obedience to Beijing’s desire to crush Hong Kong’s pro-democracy movement paved the way for him to win an uncontested vote in May as the ruling Chinese Communist Party’s preferred candidate.
“The hypocrisy is staggering and any financial institution that enables China’s atrocities should be ashamed,” said Rep. Lance Gooden (R-Texas), another member of the House Financial Services Committee.
Tara Joseph, former president of the American Chamber of Commerce in Hong Kong, argued that Hong Kong propaganda authorities are likely to weaponize Lee’s presence among senior American bank executives in an attempt to whitewash his reputation. It is a particularly sensitive time to do so, given Hong Kong’s reopening of the territory’s borders to normal business travel after more than two years of pandemic-imposed restrictions.
“Why do it [they] are you going to go sailing in Hong Kong now?” asked Joseph, who is now director of development for the nonprofit Committee for Freedom in Hong Kong.
These bankers have a ready defense: They will not violate any terms of Lee’s sanctioned status by rubbing elbows with him in November. That’s because the Treasury Department’s sanctions only specifically prohibit the “contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person.” Smiling photo ops, handshakes and effusive applause for Lee’s keynote will not qualify as violations.
“It is not against the law to go to a conversation with someone who is sanctioned … listening to them will not be a sanction issue,” said a former Treasury official, who spoke on condition of anonymity because the person was not authorized to provide journal statements.
Hong Kong’s pro-democracy activists say narrow frameworks on permissible interactions with Finance Ministry-sanctioned individuals mean that visiting senior business executives give Lee and the Hong Kong government implicit approval and boosted prestige simply by turning up to hear him speak.
“Even if these engagements do not technically violate US sanctions, they show the calculated risks that financial institutions are willing to take to appease oppressive regimes for profit,” said Samuel Chu, president of the nonprofit The Campaign for Hong Kong.
That debate reflects the disconnect between Lee’s sanctioned status and Hong Kong’s role as a global financial center. Treasury-sanctioned heads of state—think Venezuela, North Korea, and Libya’s militia leaders—usually belong to pariah states that are mostly absent from the global financial system.
Lee presides over an area that is a regional base for more than 1,200 American companies and where 70 of the world’s 100 largest banks have operations. As recently as June 2021, Goldman Sachs and Citigroup were on a hiring blitz in Hong Kong.
But the indifference of American companies to this warning carries risks.
“It is not business as usual in Hong Kong, and the companies that do business will have to contend with that uncertainty for the foreseeable future,” said Hanscom Smith, former US consul general in Hong Kong and senior fellow at Yale’s Jackson School of global affairs.