Even the Mouse Capitulated

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The New York Times
June 14, 2016

  SHANGHAIDisney had pushed China too hard, putting the company’s plans for a new theme park here in limbo. Now, Robert A. Iger wanted to kick the yearslong negotiations into high gear.
  Mr. Iger, Disney’s chief executive, took a corporate jet to Shanghai in February 2008 to meet with the city’s new Communist Party boss, Yu Zhengsheng. Over dinner at a state guesthouse, Mr. Iger offered a more conciliatory approach, setting the tone for the next phase of talks.
  After that, Disney substantially dialed back its demands. In addition to handing over a large piece of the profit, the control-obsessed company would give the government a role in running the park. Disney was also prepared to drop its longstanding insistence on a television channel.
  For Disney, such moves were once unthinkable. Giving up on the Disney Channel meant abandoning the company’s proven brand-building strategy. “We’re kidding ourselves if we think we’re going to get everything we want,” Mr. Iger recalled saying at the time.
  Mr. Iger’s trip and the new attitude in the talks that followed appeased Chinese officials. Before long, they had struck a landmark deal to build the $5.5 billion Shanghai Disney Resort, opening China to a singularly American brand and setting the pace for multinational companies to do business in the country.
  The Shanghai park, which opens on Thursday, has become mission critical for Disney as it
faces business pressures in other areas like cable. It is designed to be a machine in China for the Disney brand, with a manicured Magic Kingdom-style park, “Toy Story”-themed hotel and Mickey Avenue shopping arcade. More than 330 million people live within a three-hour drive or train ride, and Disney is bent on turning them into lifelong consumers.
  But Disney is sharing the keys to the Magic Kingdom with the Communist Party. While that partnership has made it easier to get things done in China, it has also given the government influence over everything from the price of admission to the types of rides at the park.
  From the outset, Disney has catered to Chinese officials, who had to approve the park’s roster of rides and who were especially keen to have a large-scale park that would appeal to adults as well as children. The Shanghai resort, which will ultimately be four times as big as Disneyland, has a supersize castle, a longer parade than any of the other five Disney
resorts around the world, and a vast central garden aimed at older visitors.
  Worried that importing classic rides would reek of cultural imperialism, Disney left out stalwarts such as Space Mountain, the Jungle Cruise and It’s a Small World. Instead, 80 percent of the Shanghai rides, like the “Tron” lightcycle roller coaster, are unique, a move that pleased executives at the company’s Chinese partner, the state-owned Shanghai Shendi Group, who made multiple trips to Disney headquarters in California to hash out blueprint details.
  Disney then ran with the idea, infusing the park with Chinese elements. The Shanghai resort’s signature restaurant, the Wandering Moon Teahouse, has rooms designed to represent different areas of the country. The restaurant is billed as honoring the “restless, creative spirit” of Chinese poets.
  Such accommodation is becoming increasingly common. A growing number of multinationals have agreed to cooperate with the Chinese state through alliances, joint ventures or partnerships, all in the hopes of garnering more favorable treatment and gaining access to the world’s second-largest economy, after the United States.
  And they are doing so at a time when the Chinese government is
growing more assertive and nationalistic. Emboldened by the size and breadth of its economy, China is stepping up its demands, pressuring companies to lower their prices, hand over proprietary technology and help advance the country’s development goals, even if that means financing the growth of local rivals.
IBM has promised to share technology with China. LinkedIn has agreed to censor content inside the country. Even Google has been scrounging for a way back into China, after withdrawing in 2010 in the face of accusations of government censorship and intrusions by state-backed hackers.
  “This is part of the China trade-off,” said Aswath Damodaran, a professor of finance at the Stern School of Business at New York University. “If your market is so big, we’ll accept rules and regulations we wouldn’t in other parts of the world.”
  For Disney, if all goes as planned, the Shanghai park will create an ecosystem of demand in China for movies, toys, clothes, video games, books and TV programs. Mr. Iger has called Shanghai the “greatest opportunity the company has had since Walt Disney himself bought land in Central Florida” in the 1960s.
  That site, of course, became Walt Disney World, a group of four theme parks that attracts roughly 40 million visitors annually. About 11 million visitors are expected next year at the Shanghai park, with annual attendance estimated to reach 20 million within a few years, according to Jessica Reif Cohen, an analyst at Bank of America Merrill Lynch.
  If all doesn’t go as planned, Disney will suffer the wrath of Wall Street, which expects the resort to offset slower growth at ESPN, the company’s longtime profit engine, and some of its other theme parks. The last thing Disney wants is another Disneyland Paris, a money pit that suffered from cultural miscues and, after 24 years, is still struggling to turn a profit. Hong Kong Disneyland, which is relatively small, has had mixed financial results since opening in 2005.
Mr. Iger has staked his personal legacy on Disney’s partnership with the Chinese government. Last September, he brought a group of Disney board members to Shanghai to show off the park. They took in the world’s largest Disney castle, looking on as 11,000 construction workers raced to finish a “Pirates of the Caribbean”-themed underwater voyage. His signature is quite literally on the place: He autographed the castle’s golden spire before it was attached last year.
  While he delegated certain duties to lieutenants, Mr. Iger has been the guiding force. He pre-tasted the food, which will include items like pork knuckles and Donald Duck-shaped waffles, and decided which characters would appear in the parade. He has held face-to-face talks with Chinese presidents, prime ministers and propaganda officials.
  Mr. Iger, 65, has sought a personal relationship with China’s paramount leader, President Xi Jinping. After Mr. Iger learned that Mr. Xi’s father, Xi Zhongxun, a revolutionary leader, had visited Disneyland in 1980, he pressed his staff to find a photograph. A color photograph shows the president’s father, who died in 2002, wearing a Mao suit, shaking hands with Mickey Mouse. Mr. Iger presented it to the Chinese leader as a gift and a symbol of their partnership.
  When Mr. Xi stopped in Seattle last September, Mr. Iger was among the American executives on hand to welcome him. At the White House state dinner a few days later, Mr. Iger was seated at Mr. Xi’s table. Just last month, Mr. Iger flew to Beijing to meet the president at the Communist Party’s leadership compound.
  “It’s good to see the fruits of efforts over the years,” a smiling Mr. Xi told Mr. Iger at a public meeting between the men at the Great Hall of the People in early May. “And I believe the new cooperation will continue to yield new outcomes.”

Mickey in the Land of Mao
  It may be all smiles now, but Mickey Mouse knows all too well what can happen when the Middle Kingdom gets mad.
  The year was 1997, and Disney had finally found a bit of success in China. “The Dragon Club,” a Disney cartoon series, was popular in Chinese homes, and “The Lion King” had given Disney its first big hit in Chinese cinemas. But then came “Kundun.”
  As part of a now-defunct effort to make films for more sophisticated audiences, Disney agreed to back the director Martin Scorsese, who wanted to make “Kundun,” about China’s oppression of the Dalai Lama, the Tibetan spiritual leader. The Chinese government, which considers the Dalai Lama a separatist, denounced the project and pressured Disney to abandon it.
  In the end, Disney decided that it could not let an overseas government influence its decision to distribute a movie in the United States. “Kundun” was released, and China retaliated by banning Disney films and pulling “The Dragon Club.”

   “All of our business in China stopped overnight,” Disney’s chief executive at the time, Michael D. Eisner, recalled.
  Although “Snow White and the Seven Dwarfs” was screened in Shanghai in the 1930s, Disney really had no measurable business in China until decades later, when Mr. Eisner secured Sunday evening placement for Mickey Mouse and Donald Duck cartoons on the country’s biggest state-run broadcaster. That led to Mickey’s Corner kiosks that sold consumer goods like Minnie Mouse-branded shampoo, and to more television shows.
  By the time of the “Kundun” debacle, the demand was clearly there. Mr. Eisner just needed to undo the damage.
  Disney hired former Secretary of State Henry Kissinger and mounted an intense lobbying effort. In October 1998, Mr. Eisner met Zhu Rongji, who had just been named prime minister, at China’s leadership compound in Beijing. Mr. Eisner apologized for “Kundun,” calling it a “stupid mistake,” according to a transcript of the meeting.
  “This film was a form of insult to our friends, but other than journalists, very few people in the world ever saw it,” Mr. Eisner said during the meeting. (“Kundun” bombed, taking in just $5.7 million against a production budget of about $30 million.)
  Mr. Eisner said the company had learned a lesson. And he introduced Mr. Iger, then Disney’s international president, as the person who would carry on negotiations for a theme park. The Chinese prime minister responded favorably. Land in Shanghai, he said, had already been set aside.
  And just like that, the door to China started to reopen.
  The negotiations that followed were slow and painful. Disney had to navigate a thicket of agencies, bureaucrats and officials. At one point, Disney essentially had to start over in Shanghai, after a senior Chinese official was abruptly arrested on corruption charges unrelated to the park.
  There were sticking points large and small. Who would control the park? What kind of transportation infrastructure would support it? How were Disney’s nightly fireworks shows going to work in smoggy Shanghai? There was also the not-so-minor matter of introducing Disney characters to a country whose icon, since the Communists took power in 1949, was Mao.
  “Disney had to educate the Chinese government on how they operate, and the government wanted to persuade Disney that they needed a local partner to make this thing work,” said Tang Jun, one of Mr. Iger’s former lieutenants in China.
  By 2009, the Chinese government was finally on board. It took a 57 percent stake in the Shanghai resort, which includes revenue from hotels, restaurants and merchandise sold on the grounds. Disney also gave the government a 30 percent piece of the Disney management company that runs the property.
  It was in stark contrast to the deal with Hong Kong. Desperate to end a tourism slump, Hong Kong had given Disney breathtaking terms, including providing a majority of the construction funds. Disney gave up no management control.
  At the groundbreaking ceremony for the Shanghai resort in April 2011, Mr. Iger and
Thomas O. Staggs, then Disney’s theme park chief, posed for a clichéd photo: Holding shovels, the Disney executives stood alongside two of Shanghai’s most powerful leaders, Han Zheng and Mr. Yu, and ceremoniously scooped up loose dirt from an indoor stage.
  Confetti was blasted into the air. A 50-member children’s choir sang as Chinese dancers and drummers paraded onstage. Mickey and Minnie Mouse frolicked in traditional Chinese costumes.
  “This is a defining moment in our company’s history,” Mr. Iger said. “Along with our partner, the Shanghai Shendi Group, today I am very proud to announce the official launch of the Shanghai Disney Resort.”

One Bed, Different Dreams
  When the Communist Party first invited overseas companies into the country in 1979, global businesses had to team up with the state. It wasn’t pretty.
  As commercial interests clashed with socialist principles, there were wage disputes, allegations of intellectual property theft and conflicts over corporate strategy. To put it in the parlance of a Chinese proverb, it was like two people sleeping in the “same bed, dreaming different dreams.”
  Pepsi found itself managing a tanning factory, as part of its Chinese partnership. McDonnell Douglas claimed that some machine tools had been diverted to a factory that made missiles, in violation of United States rules. The American and Chinese partners in Beijing Jeep disagreed over quality control.
  “I now tell people, ‘If you don’t have to do a joint venture, don’t,’” said Don St. Pierre Sr., an American businessman who worked for Beijing Jeep.
  After the blowups, China started to allow some companies to go it alone. But Disney didn’t have a choice. The Communist Party maintains strict control over media companies.
  The partnership has significant perks for Disney. State-run construction companies cleared a 1,700-acre tract to build the resort, which will ultimately include two additional Disney theme parks and thousands of Disney hotel rooms, analysts say. Authorities have relocated residents, moved graves and closed more than 150 polluting factories. The government built new infrastructure, including a subway line that goes directly to the park’s front gate.
  Officials have also taken unusual steps
to protect Disney from piracy in China, a country where copyright infringement is common and the government rarely intervenes. Whether the state can stand by that pledge is uncertain. But early signs are promising. Last November, regulators fined five copycat Disney hotels located near the theme park. Around the same time, nearly 2,000 counterfeit Disney items, including hundreds of Winnie-the-Pooh shirts, were seized in Hangzhou. The government is even sending regulators to Disney for special training to help them better identify counterfeits.
  The partnership is “structured so that it will work,” said Mr. Iger. “They have a tremendous amount riding on it.”
  But Disney is stepping into a potential minefield. State leaders are growing more confident about exerting influence over multinationals. The government is pushing to upgrade China’s economy, and it wants state-owned companies to learn from partners like Disney while amassing a large share of the profits.
  Along with its stake in the park, Shendi stands to make a fortune from a 4,000-acre plot of land that it controls around the resort. In other locales, Disney has typically maintained a firm grip on the immediately adjacent real estate. Shendi wants to use such land for hotels, spas and retail, like its new Shanghai Village, a 590,000-square-foot outlet mall, with luxury shops selling Armani, Kate Spade, Juicy Couture and other brands.
  The Shanghai government sees Disney as just one piece of a broader effort to redevelop Pudong, the city’s easternmost region, by creating industrial parks and tourist destinations. Just 30 miles southeast of Disney’s site, the government has promoted Winterland, which bills itself as the world’s largest indoor ski resort and entertainment facility. Nearby, Haichang Polar Ocean World promises “performances” by beluga whales, dolphins, polar bears and arctic wolves.
  China wants Shanghai to be this kind of dragon’s head, a showcase city for all the world to see,” said Robert Lawrence Kuhn, an American businessman who has worked with the Shanghai government. “Disney is part of that grand strategy.”
  The partnership structure puts Disney in a complicated spot. Shendi is really a consortium of four powerful government-owned companies: the Shanghai Radio, Film and Television Development Company; Jin Jiang Hotels; Bailian retail shops; and a property developer, the Lujiazui Group. And each of those companies has separate business ties to Disney’s new resort.
  The Jin Jiang Group has a contract to provide tourism services for the park. The Lujiazui Group helped develop the world’s largest Disney Store. The Shanghai Media Group, a division of the development company, is positioned to capture a big share of the park’s television and advertising budget, since it controls the city’s biggest television stations, as well as major newspapers, magazines and radio properties.
  So Disney will have to deal with a bewildering array of state affiliates acting as partners, suppliers and even competitors, making contract negotiations complex and raising thorny conflict-of-interest issues. Shendi, for instance, has set up its own energy company to supply natural gas to the theme park site. And Shanghai Media Group has formed alliances or made investments with Disney competitors like Sony, Warner Bros. and DreamWorks Animation.
  “The more partners you have, the more potential conflicts,” said Oded Shenkar, a professor of business at Ohio State University and an authority on Chinese joint ventures.
  “Each of those state companies may come with multiple other affiliations,” he added. A multinational must then “contend with a whole network of relationships and interdependencies they often cannot decipher.”

A Master of Control
  When Disney unveiled the website for the Shanghai park in March, the fervor was instantaneous. The site registered five million hits in less than half an hour. Tickets for the first two weeks sold out within hours. Over one weekend in early May, with the opening still a month away, more than 100,000 people visited the resort to peek through the park gates and explore a shopping area that doesn’t require a ticket.
  But criticism has begun, too. Disney has been
pilloried in local media for its prices ($1 for a single steamed bun, or about five times the street price). Some initial visitors trampled the public gardens. And Disney has had to deploy uniformed security guards to maintain order at popular rides, where lines during the soft opening stretched up to three hours. Shanghai authorities recently published an etiquette guide.
  “The frenzy of Mickey Mouse and Donald Duck and the era of blindly following them have passed,” Wang Jianlin, the chairman of Dalian Wanda Group, which operates a chain of Chinese theme parks, said on state television in May.
  Mr. Iger brushed off Mr. Wang’s criticism as “patently absurd,” and said media reports about food pricing complaints were overblown. “We made a decision with our quick-service restaurants to go higher-end, and there’s a cost to that,” he said.
  Disney needs to avoid getting lost in translation, an especially difficult proposition in China. It is a deeply American brand trying to break into a country where the government wants to suppress Western ideals.
  Already, Shanghai Disneyland is triggering concerns about American cultural imperialism. At a gathering of China’s political leaders in Beijing in March, an official called for limiting Disney’s expansion and growth.
  “I suggest that we shouldn’t allow too many Disneyland theme parks to be built” in China, said Li Xiusong, the deputy head of culture in the eastern Anhui Province. “If children follow Western culture when they are little, they will end up liking Western culture when they grow up and be uninterested in Chinese culture.”
  The country’s leaders have also grown more nationalistic in recent years: Everything must serve the state’s interest. The Communist Party is using Disney to bolster the country’s own media and entertainment companies, as well as to improve China’s image abroad. And the Chinese government is a master of control, known for strictly censoring Western media. This spring, with little warning or explanation,
Chinese regulators shut down Apple’s digital book service and DisneyLife, a four-month-old subscription-based movie streaming service operated by Alibaba.
  Disney is going to extraordinary lengths to prove its commitment to China and the Communist Party. During a 2010 meeting with China’s propaganda minister, Mr. Iger pledged to use the company’s global platform to “introduce more about China to the world.” And he has done just that.
  Disney is working with China’s Ministry of Culture to help develop the country’s animation industry and has agreed to work with Shanghai Media Group to make films for global audiences. Notably, Disney partnered with the state to produce “Born in China,” a film that promises to “showcase to the world the spectacular wildlife and natural beauty of China,” which
a trailer depicts as snuggly baby pandas, snow leopards and lavish aerial shots of pristine mountain ranges.
  “When global brands ask me what they need to do to improve their chances in China, I often paraphrase John F. Kennedy: Ask not what China can do for your business, but what your business can do for China,” said John A. Quelch, who teaches at Harvard Business School and has extensive experience in China. “They need to demonstrate that they are willing to promote things the government is interested in.”
  Mr. Iger is trying especially to give Shanghai Disney some Chinese flair. He instructed park designers to infuse as many Chinese elements as possible.
  Builders collected indigenous trees from all around China, including a 59-foot chestnut oak from Zhejiang Province, to adorn the grounds. A “Tarzan” show was directed by Li Xining, an acrobatics expert who once worked for the Chengdu Military Area Command under the People’s Liberation Army. The Broadway version of “The Lion King” will be performed entirely in Mandarin — a first.
  Mr. Iger even came up with a new slogan for the Shanghai resort, calling it “authentically Disney and distinctly Chinese.” He repeats the phrase constantly when talking about the site, and Disney executives in Shanghai have posted it around their offices. It is supposed to be a sign of respect for China and its people.
  “What are we doing here that will make this park successful in China?” Mr. Iger said at an investor event in May. “One of the critical elements was making it distinctly Chinese, making sure that the people who visit this park feel that it’s theirs.”

Follow David Barboza @DavidBarboza2 and Brooks Barnes @brooksbarnesNYT on Twitter.


U.S. Probes Chinese Ownership of CIA-Linked Insurance Company
By Jeff Stein On

  Insurance company Wright USA had become a financial lifeline for CIA and other officials who found themselves under investigation. When it was quietly acquired by a Chinese firm, the FBI launched a criminal probe into whether its ownership gives Chinese spy agencies a pipeline into the personal information of thousands of American intelligence and counterterrorism  officials. Kevin Lamarque/Reuters

| Federal investigators are taking a close look at the Chinese ownership of an American insurance company that has been selling legal liability insurance to senior CIA, FBI and other intelligence officials and operatives for decades.

  The company, Wright USA, was quietly acquired late last year by Fosun Group, a Shanghai-based conglomerate led by Guo Guangchang, a billionaire known as “China’s Warren Buffett” who has high-level Communist Party connections. 

  The links between Guo and Wright USA came under scrutiny by the Treasury Department’s Committee on Foreign Investment in the United States, as well as the Office of Director of National Intelligence, the coordinating body of all U.S. spy agencies, soon after Fosun announced the purchase of Wright’s parent company last November. The FBI has also launched a criminal probe into whether the company made “unauthorized disclosures of government data to outsiders,” according to a well-placed source, who like others, spoke to Newsweek on condition of anonymity because the information was sensitive.

 (The FBI declined to comment, and Fosun denies the FBI has asked it for any documents.)

  U.S. officials are concerned that the deal gave Chinese spy agencies a pipeline into the names, job titles, addresses and phone numbers of tens of thousands of American intelligence and counterterrorism officials—many working undercover—going back decades. 

  On Tuesday, perhaps in response to U.S. government concerns, Fosun announced it was putting Wright USA’s parent company, Bermuda-based Ironshore Insurance, up for sale. Fosun spent $2.3 billion over two years acquiring the company, Reuters reported. No timing for a sale was announced.

  A Fosun representative said the concerns about the security of Wright USA’s data were baseless. The company was “not connected to the Chinese government,” he said, and “no data on individual Wright policyholders was ever shared with Fosun.” After the Treasury Department’s Committee on Foreign Investment in the United States opened its investigation late last year, he said, “the companies put in place additional measures to protect the Wright policyholder data.”

  Wright’s niche insurance business is little known outside U.S. intelligence circles. In 2008, The New York Times described how the company, founded in 1965 by a former FBI agent, had become a financial lifeline for CIA and other officials who found themselves under investigation. Its clients then included former CIA Director George J. Tenet; Scott W. Muller, the agency’s former general counsel; John A. Rizzo, acting general counsel during the George W. Bush administration; and José Rodriguez, the CIA operations chief who ordered the destruction of CIA interrogation videotapes.

  Wright’s business nearly doubled between 2001 and 2008, from about 17,000 to 32,000 policyholders, “spurred in part by a spate of lawsuits, investigations and criminal prosecutions related to mistreatment of detainees from Iraq to Guantánamo Bay, an immigration crackdown and other aftershocks of 9/11,” wrote Times national security reporter Scott Shane. It was “popular with FBI agents, Secret Service officers, and Immigration and Customs Enforcement workers as well as CIA officers.”

  Indeed, Wright USA was the CIA’s preferred source for Federal Employees Liability Insurance, or FEPLI, a former top CIA official told Newsweek. “The whole time I was there, they were the underwriter,” he said. ”If you wanted FEPLI, that’s where you went.” In the application form, “you have to give a general description of your duties, and the kinds of issues you deal with,” he said. But “the people we dealt with were cleared” to handle such sensitive information.

  A CIA spokesman declined to comment.

  Some senior security officials were fatalistic about the potential security breach, in light of China’s alleged cybertheft of 21.5 million federal government employee files last year from the Office of Personnel Management.

  “They already have our info from that,” a Homeland Security official said. “They probably have a photo of me and other data from my passport. My room’s been tossed every time I’ve gone over there. They don’t even try to hide that they have information on you. They’ve got folders on all of us.”

  Nevertheless, some former U.S. intelligence and security officials, alarmed by Wright’s sale to Fosun, have been thinking about how to get the company barred from selling Federal Employees Liability Insurance to the CIA and other agencies—or maybe even to take over its business.

  “Wright’s FEPLI insurance business gives it an extraordinary ability to target, collect and aggregate very sensitive information about U.S. intelligence staff and contractors,” Tom Woolston, a former CIA officer, wrote last year in a private report for a group of potential investors. He concluded that Guo’s Beijing connections—he is a delegate to the Chinese People's Political Consultative Conference, a high level legislative body, among other prestigious positions—made him an unsuitable owner for the company.

  “The Communist Party of China, for purposes of U.S. intelligence services, is considered a foreign entity hostile to the interests of United States,” Woolston wrote. “Wright USA cannot continue its FEPLI business under foreign ownership,” considering its “30-year relationship with the U.S. intelligence community.…” 

  Fosun evidently felt the combined heat of federal investigations and media inquiries. On June 6, eight months after it was acquired by Fosun, Wright USA sent a letter to policyholders headlined “updates on our ownership and privacy policies.” It announced the company’s November 2015 purchase by Fosun, which it described only as “a multinational corporation headquartered in China.” It made no mention of Guo or his Chinese Communist Party connections. (Likewise, Fosun’s ownership of Ironshore and Wright USA goes unmentioned on their websites.)

  [Fosun spent $2.3 billion over two years acquiring Wright USA. Bobby Yip/Reuters]

  In his 2015 memo, Woolston advised that Wright’s “failure to prospectively disclose” its foreign ownership could leave it liable to civil and criminal prosecution.

  None of the half-dozen former CIA officials contacted by Newsweek remembered receiving any notice of Fosun’s ownership of Wright, including the company’s June 6 letter to policyholders. One, who recently retired under cover as a State Department officer, said that letter looked like junk mail so he “didn’t pay any attention to it.” Prompted by Newsweek, he retrieved the envelope and opened it. “It’s shocking,” he said after reading the letter. “It’s amazing that nobody else has mentioned it.”

  “They may be trying to figure out what the hell is going on,” he said of U.S. agencies responsible for countering foreign intelligence operations. “It could take months and months to figure out.… It’s an administrative nightmare, for sure.”

  U.S. counterintelligence officials face a quandary on how to respond to the possible security breach, well-informed sources said. If a Chinese spy service in fact has real-time access to Wright’s transactions, one said, they may be monitoring policy cancelations for clues to the identities of undercover officials.

  “It’s one thing to say the [Chinese] government hacked it, It’s another thing to suggest Wright was somehow complicit in facilitating a transfer of information,” the Fosun official said. "It was not."

  A Treasury spokesperson said the department was forbidden by law to disclose any information to the public about its investigations.

  After repeated inquiries from Newsweek and facing multiple investigations, Fosun on Tuesday announced that it was selling Ironshore, Wright USA’s Bermuda-based parent company, “as soon as possible.” Guo also told Reuters that Fosun “will focus on its tourism business this year.” The company “has spent more than $30 billion buying insurance companies, property and tourism-related assets overseas, mainly in Europe and the United States,” Reuters reported.

  "It is most likely that this sale of Ironshore is a reaction to the FBI investigation…" said Philip Manuel, a former Pentagon counterintelligence agent and lead investigator for the Senate Permanent Subcommittee on Investigations, who is also advising potential investors in Wright. “Ironshore/Fosun,” he alleged in an email to Newsweek, “are trying to do damage control to head off bad publicity.”

  Manuel said the security concerns over Wright USA were justified, considering the historically close relations between Chinese businesses and Beijing’s spy services. He pointed to the Obama administration’s response to Chinese ownership of New York’s famed Waldorf Astoria Hotel, which "led our counter-intelligence people to keep the president and U.S. officials from staying [there] once it was ascertained that the relevant suites and rooms had been equipped with listening devices."

  Michelle Van Cleave, who headed the policy-making National Counterintelligence Executive during the first George W. Bush administration, said Fosun’s ownership of Wright USA posed a grave security risk, whether it knowingly provided information to its Chinese parent company or not. 

  The breach only begins, she said, when intelligence officials, including undercover personnel, provide Wright with their real names, home addresses, telephone numbers and email addresses. But it widens considerably when officials file claims because a federal or congressional investigation causes them to hire a lawyer.

  “Knowing that an individual in a sensitive position may have a problem at work is red meat to an espionage service looking to recruit inside sources,” Van Cleave told Newsweek. “Usually, spies have to work hard for that information. Owning the insurance company means that the unwitting American is filling out the forms that say ‘target me.’”