"Unconscionable to Profit From Fueling China's Military" - Select Committee Launches Investigation Into BlackRock & MSCI

WASHINGTON, DC – "It is unconscionable for any U.S. company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses. We therefore seek additional information regarding this deeply troubling matter," - Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL) wrote in a letter to the CEOs of BlackRock and MSCI on Monday.

Following a rigorous examination of BlackRock and MSCI's Chinese investments decisions, Chairman Gallagher and Ranking Member Krishnamoorthi today launched an investigation into the two firms. BlackRock manages trillions of dollars, drawing from Americans' hard-earned pensions and savings, and MSCI directs the investments of funds from millions of Americans' bank accounts. Chairman Gallagher and Ranking Member Krishnamoorthi uncovered that BlackRock and MSCI invest or enable the investment of Americans' savings into dozens of blacklisted Chinese companies that threaten US national security or support the Chinese Communist Party's human rights abuses.

In the letters, Chairman Gallagher and Ranking Member Krishnamoorthi write, "Our review has shown that, as a direct result of decisions made by (BlackRock/MSCI), these Americans are now unwittingly funding PRC (People’s Republic of China) companies that develop and build weapons for the People’s Liberation Army (PLA)—the PRC’s military—and advance the CCP’s stated mission of technological supremacy. By facilitating massive flows of American capital to these and other PRC entities linked to the PLA or to human rights abuses, (BlackRock/MSCI) is exacerbating an already significant national security threat and undermining American values."

Chairman Gallagher and Ranking Member Krishnamoorthi wrote to request extensive information from the financial behemoths, including:

• A list of all the companies included on MSCI indexes, and for each company, list the indexes on which that company is included. 

• A detailed description of the factors they consider when including companies in indexes.

• All policies, procedures, and related guidance documents pertaining to conflicts of interest and how (BlackRock or MSCI's) Oversight Committee and other governing bodies have applied such policies, procedures, and related guidance with respect to the engagements with public or private entities based in or with significant operations in the PRC.

• A full list of indexes provided, specifically identifying each index that includes any company identified in this letter, and a detailed summary of these indexes including a breakdown of U.S. investor exposure, as of June 30, 2023, January 1, 2023, and January 1, 2022.

The lawmakers also asked BlackRock and MSCI:

• If they are able to perform thorough due diligence on all PRC companies included in their indexes, including those listed on the USG red-flag lists or any other red-flag lists. And if so, how and through what means do they do so? If not, what is their process for determining whether to include those companies in their indexes? 

• What transparency do they provide to the public and to investors regarding the inclusion of red-flag companies in their indexes? 

Read the full text of the letter to BlackRock HERE

Read the full text of the letter to MSCI HERE