Alibaba founder Jack Ma (R) is facing criticism from Capitol Hill for the acquisition of MoneyGram by Ant Financial, an Alibaba subsidiary. (Photo : Getty Images)
Ant Financial is facing backlash for its $1.2 billion buyout of MoneyGram as U.S. lawmakers accuse the acquisition of the U.S. cash-transfer group by a subsidiary of China's Alibaba and the Chinese government as a security threat.
In letters addressed to U.S. Treasury Secretary Steve Mnuchin, Republican senators Pat Roberts and Jerry Moran said that Ant Financial's takeover of MoneyGram could hurt America's financial infrastructure.
Mounting opposition in Washington against Chinese acquisitions of U.S. assets puts increasing pressure on Jack Ma, the e-commerce magnate behind Alibaba, who has been positioning himself as a close friend of U.S. President Donald Trump.
Last week, Ma promised to bring a million small U.S. businesses on to Alibaba's platform in an effort to boost U.S. exports to the Chinese market. He has previously pledged to generate 1 million jobs in the U.S., a move hailed by Trump.
Despite Ma's efforts to gain favor in the White House, several U.S. lawmakers across party lines are pushing for an exhaustive review of the deal by the Committee on Foreign Investments in the U.S. (CFIUS).
The committee, led by the U.S. Treasury and has the power to veto deals, is expected to issue a verdict on the transaction by midsummer, according to the Financial Times citing insider sources.
Roberts said that Moneygram's acquisition by Alibaba "should trigger no less concern than if a Chinese company were seeking to take control of a large, well-known bank."
He added that the deal sheds light on the inequity between U.S. and Chinese companies when it comes to international acquisitions.
"There is virtually no chance that a U.S. financial services company would be permitted to acquire a Chinese [rival]," he said.
Moran said that handing over financial data of U.S. citizens, including a large number of American military personnel, to a Chinese company partly owned by the Chinese government merits careful evaluation.
Both senators are from Kansas, the headquarters of Euronet, a rival money transfer company that failed to outbid Ant over MoneyGram. Last month, Euronet said that its proposed offer for MoneyGram had greater certainty of completion as it did not require CFIUS approval.
Both MoneyGram and Ant have strongly rejected such criticisms numerous times.
Alex Holmes, chief executive of MoneyGram, dismissed fears that Ant's takeover posed a national security threat to the US, noting Beijing's promise to allow access for rating agencies and credit card companies in the recently concluded trade deal between U.S. and China.
"Investment reciprocity between China and the U.S. is not an issue in this transaction. The money transfer industry in China is open to foreign competition, and MoneyGram already has a robust business in China as do other money transfer companies," he said.
Holmes added that the Trump administration's support toward Chinese investment in the U.S. will lead to a stronger relationship between the U.S. and China and help the economy.
"Investments in the U.S., like the one Ant will make in our company, are critical to creating new jobs and increasing economic growth in our country," he added.
MoneyGram shareholders will vote on the deal on Tuesday.
