As news breaks Tuesday of Senate Majority Leader Mitch McConnell’s praise for the United States’ election “process” and declaration of “congratulations” for “President-elect Joe Biden,” the Kentucky senator’s extensive family ties to China have resurfaced as a topic of conversation.
McConnell’s marriage into the Chao family dynasty has coincided with a trajectory of ever-increasing personal profit for McConnell and the Chaos, as well as Chinese state business interests.
Bank of China
McConnell’s wife, Elaine Chao, is the daughter of shipping magnates James and Ruth Chao and the sister of Angela Chao, the latter of whom was appointed to a non-executive position on the Bank of China’s board of directors in 2016.
Chao Family Wealth
A massive spike in McConnell’s financial disclosures occurred in 2007 and 2008 following the death of Ruth Chao, with the senator’s federal disclosure jumping from $3 million to $33 million in that two year span according to Forbes.
McConnell’s re-election campaigns have received over $1 million in contributions from Elaine Chao’s family, including James and Angela, according to a 2019 report from the New York Times.
“Ms. Chao has no formal affiliation or stake in her family’s shipping business, Foremost Group. But she and her husband, Senator Mitch McConnell of Kentucky, have received millions of dollars in gifts from her father, James, who ran the company until last year. And Mr. McConnell’s re-election campaigns have received more than $1 million in contributions from Ms. Chao’s extended family, including from her father and her sister Angela, now Foremost’s chief executive…”
“Foremost has received hundreds of millions of dollars in loan commitments from a bank run by the Chinese government… Foremost, though a relatively small company in its sector, is responsible for a large portion of orders at one of China’s biggest state-funded shipyards, and has secured long-term charters with a Chinese state-owned steel maker as well as global commodity companies that guarantee it steady revenues.”
Much of the Times report tracks earlier reporting by Peter Schweizer, whose 2018 book “Secret Empires” is mentioned in the Times account. Along with detailing the ties of the Chao family to the Chinese government, the book also noted the overseas business pursued by Hunter Biden while his father was vice president—business that often involved countries where his father played a significant role in U.S. diplomacy.
The paper adds that Mr. Heinz thought their work “created the appearance of selling influence, according to a person familiar with the conversation… Mr. Heinz, who was not involved in the China or Ukraine efforts, began decoupling his business interests from those of Mr. Biden and Mr. Archer.”
If their work bothered a friend and business partner perhaps it will bother voters as well. It’s not clear what value Hunter Biden adds when he does deals overseas. But while his father was vice president he seems to have been treated in China as a financier of the first rank. Shortly after Hunter Biden travelled with his father to China aboard Air Force Two, the younger Biden’s firm Rosemont Seneca scored a business coup. In 2014, the Journal’s Chao Deng reported:
“A consortium of foreign and Chinese private-equity firms is aiming to raise about $1.5 billion to invest abroad, with the yuan-denominated portion of the fund to be converted to U.S. dollars through Shanghai’s free-trade zone.”
“The fund—launched by Chinese asset managers Bohai Industrial Investment Fund Management Co. and Harvest Fund Management Co. alongside U.S. investment and advisory firms Rosemont Seneca Partners and Thornton Group LLC—started fundraising in the second quarter, and has raised its target to $1.5 billion from an original $1 billion plan, a spokesman at Bank of China International Holdings Ltd. said. BOCI is one of the largest stakeholders in Bohai.”
Participating in such a deal was not a privilege extended to every foreign firm. Noted the Journal:
“The Bohai-Harvest fund is likely one of the biggest Sino-foreign collaborations in private equity to take advantage of the free-trade zone’s benefits in converting yuan to dollars that can then be invested in foreign companies. The funds are raising a combination of yuan and U.S. dollars… Normally, China restricts free conversion of its currency.”
The deal was perhaps also remarkable because to that point much of Hunter Biden’s expertise lay in the business of influence rather than investing. In 2013 Andrew Ross Sorkin wrote in the New York Times:
“Until 2008, R. Hunter Biden, son of then-Senator Joseph R. Biden Jr., lobbied Congress regularly. The Washington Post reported last year that “56 relatives of lawmakers have been paid to influence Congress” since 2007.”
“While the House and Senate passed rules to limit some lobbying, the House left enough wiggle room for parents and children of lawmakers to still lobby.”
If the spotlight remains on U.S.-China relations, how much wiggle room will voters give to Messrs. Biden and McConnell?
Chao Shipping Empire
Aside from her position at the Bank of China, Angela Chao also serves as the CEO of Foremost, which is the Chao family’s billion-dollar maritime shipping empire. While Foremost is an ostensibly American company with offices located in New York City, Forbes noted that the company’s fleet of vessels “sail under flags registered in Liberia and Hong Kong, and the company does the vast majority of its business in Asia.”
Foremost’s upward trajectory has remained steady during McConnell’s tenure in the Senate, with the company continuing to prosper even during multiple economic downturns in the industry. Shipping database VesselsValue has estimated the company fleet’s net worth at $1.2 billion, making it the most valuable such fleet of any dry bulk shipping operation headquartered in the United States in 2019.
Perhaps some of Foremost’s good fortune can be attributed to the several hundred million dollars’ worth of loans it is contracted to receive from the Chinese government, or the fact that James and Angela Chao, who describe themselves as Americans, have served on the board of the Chinese government-owned China State Shipbuilding corporation. China State Shipbui
The New York Times noted in its 2019 report that the Bank of China, where Angela Chao serves as a non-executive director, is a top lender to China State Shipbuilding.
America Last, China First Politics at Department Of Transportation
Under Elaine Chao’s tenure as Secretary of Transportation, the agency budget,
“has repeatedly called to cut programs intended to stabilize the financially troubled maritime industry in the United States, moving to cut new funding for federal grants to small commercial shipyards and federal loan guarantees to domestic shipbuilders” according to the Times.
The report also noted that while the Chao family has paid for Chinese programs that provide scholarships and ship simulators for Chinese sailors, Elaine Chao’s Department of Transportation has repeatedly tried to excise grant funding for programs that keep domestic American vessels in service and buy ships that would be used to train American seamen.
McConnell and the Chaos have repeatedly dismissed concerns about conflicts of interest relating to the Senate Majority leader’s family ties to Foremost and Beijing, with Angela Chao insinuating that her ties to McConnell have only come under scrutiny because of anti-Chinese prejudice.
However, critics have noted that the fact McConnell’s public refusal to help President Trump in the latter’s fight to restore election integrity could be influenced by the fact that President Trump’s pro-American, hardline stance towards trade with China may pose a threat to business interests close to McConnell.
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