Secretary of Commerce Gina Raimondo and her husband own a financial stake in WeChat parent company Tencent Holdings, even as the Commerce Department reviews a ban of the Chinese tech giant.
Raimondo and her husband Andrew Moffit own a stake worth between $21,500 and $44,500 in Tencent Holdings, according to a financial disclosure filed Jan. 19 with the Office of Government Ethics (OGE). The recently-confirmed commerce secretary promised to divest from other financial positions, citing potential conflicts of interest, but did not mention divesting from her stake in Tencent Holdings.
President Joe Biden’s administration is conducting a broad review of the previous administration’s outstanding executive orders related to China including an August action that banned transactions with Tencent Holdings. Biden’s Justice Department asked an appeals court to pause a case concerning the ban in February while it reviews the action, The Washington Post reported.
“As the Biden Administration has taken office, the Department of Commerce has begun a review of certain recently issued agency actions, including the Secretary’s prohibitions regarding the WeChat mobile application at issue in this appeal,” the Justice Department said in a February court filing, according to the Post.
Federal ethics law prohibits government employees from participating in official matters where they have a financial stake, but Raimondo’s holdings in Tencent may be exempt from conflict of interest laws.
Raimondo and Moffit jointly own shares of two emerging markets exchange-traded funds (ETF), which are composed of several foreign stocks including Tencent Holdings. Altogether, the couple’s position in the two ETFs is worth between $365,000 and $750,000. The exact amount is not provided in the OGE filing.
Tencent Holdings represents the biggest position in the emerging markets ETF managed by Vanguard and the second-biggest position in the ETF managed by BlackRock, both of which are owned by Raimondo and Moffit. Their total stake in Tencent Holdings could be worth as much as $44,490.
Prior to her confirmation as commerce secretary, Raimondo promised to divest from three health care funds managed by Fidelity, an energy ETF managed by Vanguard and a pharmaceutical ETF managed by BlackRock, citing a potential conflict of interest in future dealings with any of the funds’ holdings.
“Until I have completed these divestitures, I will not participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on the financial interests of any holding,” Raimondo stated in her Jan. 19 letter to Commerce Department ethics official David Maggi.
Raimondo made no mention in the letter of divesting from the emerging markets ETFs owned by her and her husband.
A government official may be determined to have a financial interest in “particular matters” affecting the underlying holdings of an ETF they own, according to the OGE.
However, it isn’t clear if the emerging markets ETFs owned by Raimondo and Moffit would be considered a conflict of interest under the law, according to Project On Government Oversight General Counsel Scott Amey. Diversified mutual funds, for example, are often exempt from conflict of interest law.
Unlike heath care, energy or pharmaceutical ETFs, emerging markets ETFs are diversified across several sectors. The funds Raimondo is invested in, and which contain Tencent Holdings, could be exempt from laws about conflicts of interest.
“The best practice would be for Raimondo to consult with an ethics official to determine if her investment poses a conflict, and step aside if need be,” Amey told the Daily Caller News Foundation.
The emerging markets ETFs owned by Raimondo and her husband also have positions in the state-controlled China Construction Bank Corporation and Bank of China.
Raimondo was sworn in as secretary of commerce on Wednesday.
“The Commerce Department has a simple but vital mission — to spur good-paying jobs, empower entrepreneurs to innovate and grow, and help American workers and businesses compete,” Raimondo said in a statement.
The Commerce Department didn’t respond to a request for comment.