Monthly Archives: July 2018

Foreign Business Inside the PRC

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The Qualcomm’s acquisition of NXP Semiconductors is supposedly in jeopardy as the People’s Republic of China threatens approval of the acquisition in its prosecution of its long-term trade fight with the US.

But wait—Qualcomm is an American company, and NXP is a Dutch company.  Why does the PRC even have a say in this?

[The PRC] is the last of nine markets where Qualcomm and NXP need approval from competition authorities….

There’s a perfectly straightforward way around this.  The two could stop doing business in the PRC, which is not a business-friendly nation, anyway, what with the nation’s demands that foreign companies give up their technology to domestic “partners” and that they install backdoors into their core softwares so the PRC government can go in and poke around at whim.

Certainly, there would be large initial costs from walking away from such a large market, and there would be market share reduction in the middle term from ceding that market to competitors.  But what would be the costs, really?  Less anticompetitive restrictions on the combined company’s operations, less government sanctioned—even demanded—theft of proprietary and intellectual property, saddling the PRC albatross to those competitors anxious to fill the “gap.”

And real gains from quitting the PRC market: more efficiencies from better focus on the other eight markets, and a better ability to keep and expand the combined company’s technological edge over its competitors by not having to give up that edge to the PRC.

Another Role for UNRWA

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A writer of a Letter to the Editor of The Wall Street Journal wondered why the UNWRA still was involved in handling Palestinian refugees instead of the UNHCR, which handles all other refugees worldwide.  This includes Palestinian refugees in the Gulf states, Egypt, Iraq, Yemen, but not those in Syria, Jordan, Lebanon, Gaza, and other geography close to or abutting Israel.

Here’s what the UNWRA did in support of its “refugees,” in particular Hamas’ 2014 terrorist war against Israel in furtherance of their own Gaza “refugees.”

  • warehoused the terrorists’ rockets for them
  • allowed the terrorists to dig their tunnels under UNRWA facilities
  • participating in the terrorists’ staged propaganda

As another letter-writer in the same chain noted, UNRWA exists because those supporting terrorism demand it—especially, contra that writer, those in the UN.

There are Security Breaches

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…and there are security breaches.  The NLMSM wants to talk about some, and it wants to spike reports about others.

Here’s one that the NLMSM is doing its best to spike.  It seems that Peter Strzok, a most highly paid and senior HR specialist in the FBI, had a meeting in 2016 with two people the then-Intelligence Community Inspector General Chuck McCullough had sent to brief him and three other FBI folks on a…matter…concerning

an “anomaly” that their forensic analysis had found in Clinton’s server.

According to [Congressman Louie (R, TX)] Gohmert, the inspector general discovered that, with four exceptions, “every single one” of Clinton’s emails—more than 30,000—”were going to an address that was not on the distribution list.”

In other words, according to the information Gohmert received from the intelligence inspector general, something was causing Clinton’s server to send copies of all of her email communications outside of the country “to an unauthorized source that was a foreign entity unrelated to Russia.”

If true, this means that Clinton’s email communication with her top aides, department leadership, ambassadors, and other officials, including President Barack Obama, may have been read by an alien entity, perhaps a foreign power hostile to the United States. That could include confidential, sensitive, and even classified information about our foreign policy or our allies.

In response to Gohmert’s question about that during Strzok’s testimony before a joint committee hearing, Strzok claimed that while he could remember the fact of the meeting, he could remember none of the substance of it.  Which means he’d chosen to do nothing about the information the two IC IG personnel had just told him about.

Apparently, to paraphrase David Frost’s paraphrase of Richard Nixon, if the Clinton does it, that means it’s not a security breach.

It’s also interesting that Frank Rucker and Janette McMillan, the two people McCullough had sent to do the briefing, have not been called to testify.

Whose Divide?

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Gerald Seib, in his Wall Street Journal‘s Capital Journal, has an odd take on the political (personal?) divide moving through our nation.

From the moment he rode down the escalator at his eponymous Fifth Avenue skyscraper to announce his candidacy three years ago, President Donald Trump has divided Americans[]

goes his lede, and he proceeds from there.

Never mind that it was then-Majority Leader Nancy Pelosi (D, CA) who dismissed Tea Partiers as mere Astroturfers.

Never mind that it was the NLMSM that insulted Tea Partiers with the careful slur of being mere tea bagger.

Never mind that is was then-Congressman Emanuel Cleaver (D, MO) called Republicans terrorists for disagreeing with Congressional Progressive-Democrats on a bill.

Never mind that it was ex-President Barack Obama (D) who dismissed millions of Americans as mere bitter Bible-toting gun-clingers in flyover country and who insisted, while agreeing that he didn’t have all the facts, that police act stupidly.

Never mind that it was Presidential candidate Hillary Clinton (D) who dismissed millions of Americans as irredeemably deplorable racists, misogynists, homophobic, and Islamophobic.

Never mind that it’s the Left’s Antifa and BLM who routinely shout down and deny the right to speak to Americans with whom they disagree.

Never mind that it was the Left who, on Inauguration Day, didn’t just protest Donald Trump’s election and inauguration, they rioted and burned private businesses.

Trump’s comments often are personally demeaning, but they’re exactly that: personal.  Trump disparages, in uncommonly rude terms for a public office holder, other people, but he does it to individual persons.  He also only does so in response to a personal attack on him.  He doesn’t denigrate whole groups of Americans, and he doesn’t do it as the opening shot in a manufactured series of insults.

No, the divisions in our nation are long-standing and growing—and it’s the Progressive-Democrats and their Left base who are doing the dividing, and doing it with increasing zeal.

Auditors and Regulators

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American regulators regularly inspect American auditors—particularly the Big Four accounting firms, Ernst & Young, Deloitte & Touche, KPMG, and PricewaterhouseCoopers—in order to give confidence to investors and the market at large that the auditors are giving accurate and balanced reports on balanced and accurate audits of the companies they audit.

Inspecting the auditors in the People’s Republic of China is a different matter.

Big Four accounting firms use their Chinese and Hong Kong affiliates to do significant work on the yearly audits of dozens of US companies doing business in China, including Walmart, Pfizer, and 3M, according to regulatory disclosures the auditors recently made for the first time.

Those “affiliates” actually are separate entities, and the PRC won’t allow those auditors to be checked up on by our regulators.  That’s a problem, as The Wall Street Journal put it:

The arrangement could leave investors in some of the world’s largest multinationals feeling like they can’t have full confidence that the auditors who scrutinize the companies’ finances have themselves been fully vetted by US regulators. And the regulators have no way of knowing whether those companies’ tens of billions of dollars of Chinese business has been subjected to outside scrutiny to help prevent errors or fraud.

It’s not small potatoes, either.

Walmart, which has more than 400 stores in China, is primarily audited by the US arm of Ernst & Young, but Ernst & Young’s Chinese affiliate did 10% to 20% of the work on the company’s latest audit, according to an EY filing with regulators. Pfizer, which got 7% of 2017 revenue from China, is primarily audited by KPMGs US firm, but KPMG China did 5% to 10% of the work.

Obviously, the PRC’s block needs to be an item of “discussion” in trade talks between the US and the PRC.  In the interim, the regulators should think—hard—about requiring companies doing business in the PRC that are audited, at least in part, by PRC auditors to report the details of those PRC auditors’ audits.  That way investors and the market at large could have some idea, at least, of the quality of the books of those American companies’ PRC branches.