November 7, 2023
A new audit has revealed the Australian Government Future Fund has investments in at least 50 high risk Chinese companies which pose serious human rights and national security concerns.
This includes 22 companies associated with the Chinese Communist Party or the People’s Liberation Army, 14 companies linked to the oppression of Uyghurs in Xinjiang, and 14 companies linked to investments in countries which Australia has sanctioned, including Russia, Iran and North Korea. A further six companies raised other ethical or governance related concerns.
On 14 August 2023, I launched an audit through Senate Questions on Notice to determine the nature and extent of the Future Fund’s investments in China in light of media reports the government is considering imposing outbound investment restrictions for sensitive technology ventures in China following a decision of the Biden Administration to do so.
No Australian would want their taxpayer dollars or retirement savings to be inadvertently funding national security threats to our country or supporting companies facilitating serious human rights abuses.
The Future Fund invests according to the law and seeks the best return on its investments on behalf of Australian taxpayers as its ultimate beneficiaries.
It is incumbent on the Albanese government to act to prevent taxpayer dollars and Australians’ retirement savings from being invested in companies that threaten Australia’s national interest.
If our national sovereign wealth fund is so dangerously exposed, it is highly likely that other Australian investment funds – most notably in the superannuation sector – will also be at serious risk. If the government is serious about protecting the national interest then it should seriously consider limiting outbound investments on national security grounds, or at least provide guidance to investors to reduce this risk.
The Future Fund gained exposure to China in December 2007 when it invested in listed equities in China through its emerging markets program.
This exposure has increased since then, with exposure to Chinese companies reaching its highest level in 2019.
Of the 119 companies listed, an audit has revealed that there are 50 companies that pose national security or human rights risks: 22 posed potential security risks via direct or indirect association with the Chinese government or military, 14 posed human rights concerns due to associations with Xinjiang province and the oppression of the Uyghur minority population and 14 could be linked to investments in state actors like Russia, Iran and North Korea. Some of these companies had overlapping concerns across these categories and another six companies had other ethical or governance related concerns.
Several companies have been blocked from acquiring US, Canadian and European companies, with other notable concerns such as:
• Being ordered by the Canadian Government to divest investments in critical minerals.
• Being delisted from US stock exchanges for failing to comply with auditing standards.
• Fined due to not complying with money laundering standards.
• Failure to report dangerous faulty consumer products.
• Failure to comply with US sanctions.
• Aluminium Corp. of China Ltd. (Materials) & Baoshan Iron & Steel Co., Ltd. (Materials)
Media reports that US authorities identified both companies to be major beneficiaries from trade secrets stolen from US firms by Chinese military hackers in 2014.
• Zangge Mining Co., Ltd. (Materials)
Canadian Government ordered three Chinese companies, including Zangge Mining, to divest their investments in Canadian critical minerals, citing national security concerns.
• Shandong Nanshan Aluminium Co., Ltd. (Materials)
Shandong Nanshan and a subsidiary are major buyers from a Xinjiang industrial giant called Xinjiang Zhonghe Co., which is reportedly involved in carrying out the Chinese government's labour transfer programs.
