News Story

U.S. Treasury Department passes on reviewing Gotion land deal

The federal government won’t review CCP-linked Gotion for national security concerns

A recent decision by the federal government means that Gotion has avoided an obstacle to its plans to build a manufacturing plant near Big Rapids.

Gotion announced last week that it received a notice from the U.S. Treasury Department that an inter-agency committee it oversees lacks jurisdiction over the company's plans, according to a Detroit News account. The Committee on Foreign Investment in the U.S. reviews certain purchases by foreign companies and investors, looking for national security implications.

Michigan Capitol Confidential has not seen a copy of the notice, and attempts to get a comment from the depart have been unsuccessful. Other parties that have tried to obtain a copy of the notice from the government, Gotion, or both, include Big Rapids Township, The Detroit News and U.S. Rep. John Moolenaar, R-Caledonia.

The department announced June 13 that the Gotion deal is not, in the words of the law, a “covered transaction,” and therefore subject to a federal national security review. Moolenaar criticized the process for reviewing transactions.

“Today’s announcement from Gotion is not an approval from CFIUS, but another example of the broken CFIUS process where the government claims deals are outside its jurisdiction,” Moolenaar said in a statement.

“Gotion has not disclosed the materials it submitted to CFIUS and has not released the NDAs it forced Michigan officials to sign,” Moolenaar continued. “While it insists on secrecy, one document everyone has seen is Gotion High Tech's articles of association where it pledges allegiance to the Chinese Communist Party and says it will carry out party activities.”

Big Rapids Township trustees expressed their concern to a Gotion representative, in a February email obtained by Michigan Capitol Confidential. Gotion was originally seeking an expedited national security review of its proposed Mecosta County battery plant, a move that worried Carman Bean, a trustee of Big Rapids Township.

Gotion opted for the quicker review, which could be completed in 30 days. It did this by filing a document known as a voluntary declaration. The Big Rapids Charter Township Board emailed Michael H. Johnson, a lawyer representing Gotion, telling him the township was starting the more-involved notice process with the Treasury Department, over the company’s plan to purchase and develop land in Mecosta County.

The township asked Gotion to give it the information needed to complete its own notice, but it also gave the company other options. Officials said Gotion could file a notice with them, or files its own notice and give copies to the township. A notice is a longer review which can be completed in 45 days.

Johnson said in an email that the company is filing a declaration, rather than a notice. He cited “the shorter assessment period for the Declaration and the less burdensome nature,” compared to the notice. According to the U.S. Treasury, there is no filing fee for most declarations. There is a filing fee for notices, amounting to 0.15% of the transaction’s value. This could come to as much as $300,000.

Johnson said that the company’s plan is not a “covered real transaction,” so Gotion does not see the need for filing a notice. The federal government agreed, determining that the purchase and development is not a covered transaction.

Bean and the township agree with Moolenaar that the real estate deal should be a covered transaction.

The foreign investment committee reviews purchases of real estate that is near a military installation or critical infrastructure, if the buyer is a foreign entity.

The proposed Big Rapids site purchase is within 100 miles of Camp Grayling, the largest National Guard training center in the country. The camp has hosted members of the Taiwanese military, according to Bean. He adds that the proposed battery plant site is within 12 miles of the largest underground storehouse of natural gas in the country.

There are growing concerns China will invade Taiwan, which, according to The Economist, produces 90% of the world’s advanced microchips.

Six of the world’s 10 largest electric battery makers are located in China, according to Automotive News. The batteries require cobalt, and China owns almost half of the global supply. 

Johnson, the lawyer for Gotion, did not respond to an email seeking comment.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.