Earlier this summer, Congress cut off access to U.S. government contracts for a handful of prominent Chinese government-linked technology companies.
Now one of those companies—a leading surveillance equipment manufacturer, partially owned by the Chinese government—is beefing up its lobbying muscle in hopes of pushing back.
The American arm of Hikvision, which is 42-percent-owned by the state-owned China Electronics Technology Group, has brought on a roster of top K Street talent. Its recent lobbying hires include a Republican-heavyweight firm that has a track record of success with other Chinese companies targeted by U.S. policymakers but also with a bit of baggage stemming from its prior work as a foreign agent.
Hikvision was among the companies that was barred from receiving U.S. government contracts under a provision of the recently passed National Defense Authorization Act (NDAA). Lawmakers who put together that provision were concerned about Hikvision’s closeness with political leaders in Beijing, where the company has been an integral part of the communist government’s domestic surveillance apparatus. Its American arm has done extensive business with government entities from the U.S. military to municipal school districts. It has not been officially accused of using those contracts in the service of Chinese government interests.
But some lawmakers say the potential for Chinese government intrusions by way of Hikvision technology is too grave a possibility to leave unaddressed.
“Video surveillance and security equipment sold by Chinese companies exposes the U.S. government to significant vulnerabilities and my amendment will ensure that China cannot create a video surveillance network within federal agencies,” said Rep. Vicky Hartzler (R-MO), who added the Hikvision language to the House version of the NDAA.
The full scope of the language NDAA isn’t entirely clear. But according to sources with knowledge of the law and its impact, the language leaves significant ambiguity about the extent of the prohibition—for instance, whether it bars the government from buying only products that use Hikvision technology, or any products manufactured by any company that uses that technology, even if Hikvision components don’t make it into the actual products the government is procuring.
Hikvision, for its part, says the concerns are baseless—the NDAA language “was not based on any evidence, review, or investigation of potential security risks,” the company said in a statement. But because the law’s ambiguity potentially puts huge amounts of revenue at risk—the company is worth nearly $60 billion—it has embarked on a massive influence-peddling blitz.
In June, Hikvision hired lobbyists at the law firm Sidley Austin, where its team of advocates includes a former congressman and the top lawyer on the Senate Financial Services Committee. The next month, it hired the Glover Park Group, which tasked former Hill and Treasury Department staffers with the account. In August, Burson-Marteller, which already represented Hikvision, registered as a foreign agent for the company with the Department of Justice.
Then the company made perhaps its most auspicious hire. It brought on Mercury Public Affairs on a $70,000 per month contract to conduct “strategic consulting and management, related to lobbying, government relations, and public affairs, specifically concerning provisions of the National Defense Authorization Act.” The contract was signed on August 8, about a week after the Senate passed its version of the bill, and days before the president signed it. The team of Mercury lobbyists on the Hikvision account includes former Sen. David Vitter (R-LA), former Rep. Denny Rehberg (R-MT), and six others, according to filings with DOJ.
It was the latest in a string of high-profile client pickups for Mercury, which has managed to largely escape fallout over its role in former Trump campaign chairman Paul Manafort’s illicit lobbying work in Ukraine. Mercury has prospered this year in spite of the controversy generated by Mueller’s investigation into that work, for which the firm was a subcontractor. And its business has flourished in large part by securing lucrative contracts with foreign companies, governments, and political parties, many of them in repressive states such as China and Turkey.
According to a source familiar with Hikvision’s work, the company isn’t looking to strip the NDAA of specific provisions; rather, it is pressing for an official statement of congressional intent that would prevent the exodus of business that would result from regulations barring any Hikvision client from doing business with the U.S. government altogether.
The next step will be to consult with the Pentagon, where regulators will write the actual rules implementing the NDAA language, and where Hikvision will attempt to exert some influence over the makeup of regulations that could determine its fate in the U.S. market.
It may have found the ideal firm to carry out its mission in Mercury. The firm already represented ZTE Technology, another Chinese-owned company targeted by U.S. policymakers. That company was sanctioned for doing business with Iran and North Korea, but managed to secure relief from the president after it enlisted Mercury’s services in May. ZTE made it onto the short list of companies specifically targeted in the NDAA, in a show of congressional disapproval for the president’s decision to lift penalties on the company over its sanctions violations.
But for Hikvision, efforts to win over Congress now appears to be moot. Its outreach to the administration secured a (partial) victory for one embattled Chinese client. Now another one is seeking favor with the Trump administration.