Thursday10 October 2019 ★ FINANCIAL TIMES 3
A I M E W I L L I A M S— WASHINGTON
S U N Y U— BEIJING
R O M A N O L E A R C H Y K— KIEV
Hunter Biden’s business interests often
show up in unexpected places. Now,
they are at the centre of the biggest
political crisis of the Trump presidency
and the fourth impeachment inquiry in
US history.
The business ties of Hunter Biden, son
of Joe Biden, former vice-president and
2020 presidential candidate, are under
scrutiny after Donald Trump leaned on
the president of Ukraine to investigate
his activities. Mr Trump has also called
on China publicly to investigate the
Bidens.
The Ukraine revelations have led
House Democrats to open an impeach-
ment inquiry against the president, but
the nature of Hunter Biden’s business
dealings in Ukraine, China and further
afield raises questions about potential
conflicts of interest while his father was
in office. The Bidens have denied any
wrongdoing.
In addition to his ties to Ukraine
throughBurisma, the scandal-hit gas
company, and politically connected
business ventures in the US, public
records show that Hunter Biden still sits
on the board ofBHR Partners, a private
investment fund backed by a number of
Chinese state entities includingBank of
China,China Postal Savings Bank nda
China Development Bank.
Here, the Financial Times examines
Hunter Biden’s business ties at home
and abroad:
Burisma Holdings
Ukraine’s leading privately owned natu-
ral gas producer obtained some of its
most prized production assets while
Mykola Zlochevsky, its founder, headed
a ministry that doled out gas licences
under the kleptocratic administration
of Viktor Yanukovich, the former presi-
dent. After Mr Yanukovich fled to Rus-
sia in 2014, investigators started prob-
ing the company.
That year Burisma appointed promi-
nent westerners to its board, including
Hunter Biden, who reportedly earned
$50,000 a month for this role. Mr
Trump’s calls for Volodymyr Zelensky,
his Ukrainian counterpart, to investi-
gate Burisma over links to Joe Biden, his
potential Democratic rival in next year’s
presidential election, triggered the
impeachment probe.
In tweets and in a July phone call with
Mr Zelensky, Mr Trump and Rudy
Giuliani, his personal lawyer, alleged
that Joe Biden protected Burisma and
his son’s interests while he was vice-
president. Ukraine’s western backers
deny this narrative.Paradigm Companies LLC
In 2006, Hunter Biden acquired a stake
in Paradigm, a hedge fund group, fol-
lowing a failed attempt to buy the entire
company through LBB, a limited liabil-
ity partnership set up with James Biden,
his uncle. Hunter Biden recently told
the New Yorker that, while the failed
deal sounded “super attractive”, it fell
apart after he and his uncle learned that
the company was worth less than they
had thought.
Both James and Hunter Biden faced a
lawsuit from Anthony Lotito Jr, a former
business partner, who accused them of
defrauding him over the failed deal. The
Bidens countersued Mr Lotito. Aninde-
pendent audit f the fund conducted ino
2008 found accounting problems at the
firm including “failure to timely prepare
financial statements” and “failure toreconcile Investment Advisors reim-
bursement of fund expenses”.
Paradigm itself was founded by James
Park in 1991, the son-in-law of het
founder of the Korean Unification
Church, which some have called a cult.
In 2009, a fund run by Paradigm
became associated with Allen Stanford,
a Texas financier, who was later con-
victed of running an $8bn Ponzi
scheme. Stanford’s company was
responsible for marketing one of Para-
digm’s funds of hedge funds, and also
invested millions of dollars in it. At the
time, a lawyer representing Paradigm
said neither Hunter nor James Biden
had ever met Stanford.
The Bidens filed for voluntary liqui-
dation of the company in 2010.Seneca Global Advisors
Hunter Biden launched his consultancy
in September 2008, weeks after his
father had been announced as Barack
Obama’s running mate on the Demo-
cratic presidential ticket. Mr Obama
was elected president in November
2008, and Joe Biden his vice-president.
Clients includedGreatPoint Energy,
an energy technology start-up. In 2012,
GreatPoint received a $ 420 m invest-
ment from China Wanxiang Holdings,an industrial conglomerate. It was the
largest venture capital investment into
the US that year. It is unclear if Hunter
Biden was directly involved in securing
this investment.Rosemont Seneca Partners
Hunter Biden co-founded Rosemont
Seneca Partners in 2009 with Christo-
pher Heinz, stepson of John Kerry, the
former secretary of state, and scion of
the Heinz processed food fortune, and
Devon Archer, a financier and former
Abercrombie & Fitch model who
attended Yale with Mr Heinz.
Mr Archer first connected with Mr
Zlochevsky t Burisma, in 2014 when hea
travelled there to pitch a Rosemont-
linked real estate fund that he managed.
Mr Archer joined Burisma’s board in- Hunter joined soon after.
BHR Partners
BHR Partners, of which Hunter remains
a director, is a private investment fund
backed by some of China’s largest state
banks, local government and the
national pension fund.
BHR is known for being an early
investor in some of the fastest-growing
technology start-ups, includingDidi
Chuxing, the digital transport group. It
has also invested inMegvii, a facial rec-
ognition start-up making technology
that has been used in Chinese govern-
ment surveillance of Uighur popula-
tions in Xinjiang, western China.
Hunter Biden’s investment in the
fund totalled $420,000, according to
one of his lawyers, implying the fund’s
total value sits at $4.2m. The New
Yorker reported in July that Hunter and
his partners said they had not yet
received a payment from BHR.
Additional reportingAdrienne KlasaI N T E R N AT I O N A L
Trump impeachment probe
puts spotlight on Biden deals
Activities from father’s term in office raise questions about conflicts of interest
Family business:
Joe Biden with
his son Hunter,
whose overseas
interests,
including
Burisma, the
Ukrainian gas
group, below,
attracted the
attention of
Donald Trump
Nick Wass/AP/Helen M HealyK A D H I M S H U B B E R— WASHINGTON
Theimpeachment inquiry nto Donaldi
Trump has led House Democrats into a
dramatic clash with an administration
that has vowed not to co-operate with
demands for documents and testimony.
Mr Trump’s pledge to resist the
impeachment inquiry sparked by his
July 25 call with the Ukrainian president
means House Democrats will have to
fight to extract information from the
administration.
Although Congress has the legal tools
for the job in theory, in practice an
administration intent on stonewalling
can be difficult to overcome.
What powers does Congress have?
The US constitution does not explicitly
grant Congress the power to investigate
the executive branch, but since the
country’s founding that power has been
consistently assumed to be inherent to
its function as a legislative body.
For non-controversial matters, con-
gressional committees typically request
and receive documents and testimony
on a voluntary basis. In more conten-
tious situations, they can issue congres-
sional subpoenas.
If the subpoena recipients do not
comply, Congress can hold them in
criminal contempt, litigate in the courts
to enforce compliance and use its pow-
ers of inherent contempt — meaning
that Congress can itself arrest and jail
individuals until they testify or provide
documents.How does that work?
The willingness of an administration to
accommodate congressional demands
plays a large part in whether informa-
tion is provided, and how quickly.
The Trump administration has stone-
walled House Democrats on a variety of
fronts over the past year, includingfail-
ing to provide Mr Trump’s tax returns
to the ways and means committee in
response to a subpoena.
Richard Neal, the Democrat who
heads that committee, sued in July
to enforce the subpoena. While that
actionproceeds — possibly all the
way to the Supreme Court —
Mr Trump will not have to
disclose his returns.
Separately, Congress
can hold an executive
branch officer in
criminal contempt if
t h e p r e s i d e n t
orders the official
not to turn over
information. But itis up to the Department of Justice,
headed by the attorney-general, who is
appointed by the president, to decide
whether to prosecute the officer.
The justice department has usually
declined to charge members of its own
administration for not turning over
information to Congress. In July, Wil-
liam Barr, the attorney-general, was
held incriminal contempt y the House.b
But it is nlikely that he would face pros-u
ecution from his own department.
“It would appear arguable that there
is not currently a credible threat of pros-
ecution... when an executive branch
official refuses to comply with a con-
gressional subpoena at the direction of
the president,” the Congressional
Research Servicesaidin March.
Similarly, it noted: “Seeking enforce-
ment of congressional subpoenas in the
courts, even when successful, may
lead to significant delays in Con-
gress obtaining the sought-af-
ter information.”What is Congress’s power
of inherent contempt?
There is a surprisingly
rich history of Con-
gress taking matters
into its own hands and
imprisoning individu-als who refuse to comply with demands
for documents and testimony. Unfortu-
nately for House Democrats, that has
not happened since the mid-1930s.
Although the power has been recog-
nised by the Supreme Court —notably
in a 1927 ruling that upheldthe arrest fo
the then-attorney general’s brother — it
is unclear whether the US high court
today would take the same view.
In 1984, the justice department’s
office of legal counsel, inan opinion hatt
said prosecutors had discretion to
ignore criminal contempt referrals from
Congress, noted that the legislative
branch had never arrested government
officials who refused to provide testi-
mony because of claims of executive
privilege — the president’s right to keep
his conversations private.
Any attempt to use inherent con-
tempt would be politically fraught for
Democrats and risk being a distraction
from the impeachment proceedings.Are there other options?
Congress has the power of the purse and
the power to legislate. House Democrats
could threaten to cut funding, or block
new laws, unless the Trump administra-
tion co-operates with the impeachment
inquiry. So far, there seems to be little
political appetite for that route.Search for answersInquiry pits Congress against the White House
Y UA N YA N G A N D C H R I ST I A N S H E P H E R D
BEIJING
G E O R G E H A M M O N D— HONG KONGChinese state media groups have
attacked Apple for approving an app
allegedly used by protesters in Hong
Kongtofacilitatedemonstrations.The People’s Daily said in a blog post
thatApple ad “betrayed the feelings ofh
the Chinese people” by allowing access
to HKmap.live, which crowdsources
real-time locations of traffic obstruc-
tions, police and protesters in the city.
It also alleged Apple had “time after
time” taken “inexplicable” actions
related to the protests, with the Apple
Music Store containing a song that advo-
cated “Hong Kong independence”.
Apple did not respond to a request for
comment.
“The developers of the map app had
not hidden their malicious motive in
providing ‘navigation’ for the rioters,”
the daily said. “Apple chose to approve
the app in the App Store in Hong Kong at
this point. Does this mean Apple
intended to be an accomplice to the riot-
ers?”
T h e u n n a m e d d e v e l o p e r o f
HKmap.live said: “Protest is part of our
freedom of speech and I don’t think the
application is illegal in HK. It merely
consolidates information that is already
available in public domain, eg Telegram
groups.”
The political crisis, which began in
opposition to an extradition bill but has
grown to include demands for universal
suffrage, has ensnared a growing
number of multinational companies.
Beijing is pressing companies to take a
clear stand against the protests. But
businesses also run the risk of offending
consumers in Hong Kong and the west
by backing the Communist party’s hard-
line approach against the movement.
The US National Basketball Associa-
tion is struggling to stem the fallout on
its business in China, the league’s fastestgrowing international market, over a
quickly deleted tweet by Daryl Morey,
general manager of the Houston Rock-
ets, in which he said “stand with Hong
Kong”.
Chinese state media’s anger over the
incident has spread from the Rockets to
the NBA as a whole. China’s official
media has taken aim at Adam Silver,
NBA commissioner, who arrived in
Shanghai yesterday, after he defended
Mr Morey’s right to free speech.
The Shanghai Sports Federation said
that a “fan evening” event that day had
been cancelled because of Mr Silver’s
“inappropriate stance”.
“The NBA will not put itself in a posi-
tion of regulating what players, employ-
ees and team owners say or will not say
on these issues,” Mr Silver had said.
In response, the China Daily accusedthe NBA of supporting a “secessionist
pipe dream” that Hong Kong protesters
use to justify “hooliganism”.
Other industries caught up in the
Hong Kong tensions include even the
esports community. Chung Ng Wai, a
professional esports gamer, was kicked
out of a competition and had his prize
money docked after donning a gas mask
and saying “liberate Hong Kong, revolu-
tion of our times” in Mandarin during a
live interview on Sunday.
The gamer, known as “Blitzchung”,
was banned byBlizzard Entertainment,
the US games developer, from playing
its titleHearthstone. Blizzard claimed
the gamer was in breach of a tourna-
ment rule that prohibited players from
taking any action that “offends a portion
or group of the public”.
HKmap.live said aweek ago that it
had been removed from the Hong Kong
Apple App Store, with the warning:
“Your app contains content — or facili-
tates, enables, and encourages an activ-
ity — that is not legal... Specifically,
the app allowed users to evade law
enforcement.” The app developer said
its users were not lawbreakers.
On Friday, HKmap.live said it had
received approval to return to the App
Store after appealing against the deci-
sion by Apple.
Additional reporting by Nian Liu in Beijing
Editorial Comment age 8pMass protests
Chinese media lambast
Apple for Hong Kong app
TO M M I TC H E L L— BEIJINGChinese officials are offering to
increase purchases of US agricultural
productsastheyseekaninterimagree-
mentto stave off a new round of tariff
rises on October 15, say people briefed
onthetwocountries’negotiations.China’s lead trade negotiator, Vice Pre-
mier Liu He, is scheduled to begin two
days of talks with Robert Lighthizer, US
trade representative, and Steven
Mnuchin, Treasury secretary, today
followed by a meeting with President
Donald Trump tomorrow if the discus-
sions go well.
“Liu He is coming with real offers, it’s
not an empty visit,” said one of the peo-
ple briefed on the talks. “The Chinese
are ready to de-escalate.”
Both sides hope to avoid another
round of tariff rises and counter-rises
scheduled to take effect on October 15.
They want to “reset” the talks ahead
of a potential November meeting
between Mr Trump and Xi Jinping, his
Chinese counterpart, at the annual
summit of Asia Pacific Economic Con-
ference leaders to be held in Chile in
mid-November.
Despite US sanctions announced this
week against Chinese companies and
officials allegedly involved inhuman
rights abuses inthe western region of
Xinjiang, Mr Liu’s team is offering to
boost annual purchases of soyabeans to
30m tonnes compared with 20m at
present. The extra purchases would be
equivalent to about $3.25bn of orders at
current rates.
China would also make changes to
non-tariff barriers that have long frus-
trated the US Department of Agricul-
ture and American farmers.
“China has fundamentally agreed to
all of the USDA’s demands on beef, pork
and lamb,” a second person said.
“They’ve got about 60 internal changes
to their [import] process that they’ve
agreed to.
“They’re taking great note of how
[ T r u m p’s ] n e w Ja p a n [ t r a d e ]
deal... led with agriculture and theyare pushing in that same direction,” the
person added.
The partial deal signedlast week yb
Mr Trump and Shinzo Abe, the Japanese
prime minister, focused on agriculture
with more difficult issues, including
cars, intellectual property and services,
to be addressed in a more comprehen-
sive second-phase agreement.
Chinese negotiators hope that their
agriculture-related concessions, com-
bined with previously announced mar-
ket opening measures in areas such
as financial services, will provide the
basis for a similar interim agreement
with the US.
“This would be a good time for any
deal,” said Eswar Prasad, a Chinafinance expert at Cornell University
and former head of the IMF’s China divi-
sion. “Both governments are under
domestic political duress and each side
could plausibly characterise even a
modest deal as a win that helps to ease
some of those pressures.”
US negotiators, however, want the
government in Beijing to hasten a pro-
posed timetable for liberalising the Chi-
nese financial sector, with immediate
market openings rather than staggered
implementation over a number of years.
In a closed-door meeting held in Bei-
jing on September 27, senior Chinese
officials including Yi Gang, the central
bank governor and a member of Mr
Liu’s negotiating team, met representa-
tives of some of Wall Street’s largest
financial institutions to discuss the
trade talks and potential further market
opening measures.
Wall Street executives who attended
the meeting included Goldman Sachs
presidentJohn WaldronandChristo-
pher Heady, chairman of Blackstone’s
Asia-Pacific operations.Trade war
Beijing eyes buying extra US
farm products to ease tension
‘China has fundamentally
agreed to all of the
USDA’s demands onbeef, pork and lamb’
‘Protest is part of our
freedom of speech and I
don’t think the applicationis illegal in HK’
The People’s Daily accused Apple of
betraying the feelings of the Chinese