HNA's Foundation Tells N.Y. It's Not Raising Funds in N.Y.By
Nonprofit says it will register as charity that holds funds
Schneiderman’s office had asked charity for more information
HNA Group Co., the Chinese conglomerate that’s been snapping up stakes in banks and hotels, told New York’s top cop that it doesn’t need to register its Manhattan-based charity as a fundraising organization.
The nonprofit, called Hainan Chiang Charity Foundation Inc., will instead register with Schneiderman by the end of September as a nonprofit organization that merely holds funds in New York rather than solicits them. That registration may shed light on HNA’s structure by revealing information about the organization, including names of officers and affiliates.
The foundation explained its reasoning in a letter Thursday to New York Attorney General Eric Schneiderman, whose office oversees charities in the state.
"Our client has not and does not intend to solicit charitable contributions in New York State, and therefore Executive Law registration is not required," Michael Lehmann, the foundation’s attorney with Dechert LLP in New York, said in the letter obtained by Bloomberg News.
The charity said it got its first $5 million donation in March. That donation, and other funding for the foundation, will come from company sources, said spokesman Matt Benson.
"The foundation was established consistent with HNA Group’s commitment to philanthropy and, while it is in the early stage of its organization and operation, does not have plans to solicit contributions from third parties," Benson said.
New York lawyer Allen Wu had offered a different explanation last week for why the foundation wasn’t registered with Schneiderman’s Charities Bureau. He said in an interview at the time that the foundation couldn’t register because it hadn’t yet received its federal 501c3 status, a tax exemption of nonprofit organizations, which is pending.
Schneiderman had written the organization last week advising it to register with his office within 20 days or explain why it didn’t need to. That was after HNA disclosed that the Manhattan-based foundation and a second affiliate in China together control 52 percent of the company. The foundation said it had six months from the time it first received assets in March to file the registration; therefore it will file next month.
Amy Spitalnick, a spokeswoman for Schneiderman, said the attorney general’s office regularly sends letters to charities that haven’t registered. She said letters requesting information aren’t necessarily allegations of wrongdoing.
HNA is poised to buy the hedge fund firm SkyBridge Capital from Anthony Scaramucci, who was ousted July 31 as President Donald Trump’s White House communications director after a tumultuous 10-day tenure. The deal has been delayed by the Committee on Foreign Investment in the U.S., which vets sales of American assets to foreign buyers to protect national security.
Founded in 1993 as a regional airline operator, with George Soros as an early investor, HNA says it’s created 410,000 jobs worldwide and built up assets of about $150 billion. HNA has made more than $40 billion of foreign acquisitions since the beginning of 2016, buying a stake in Deutsche Bank AG and snapping up 25 percent of Hilton Worldwide Holdings Inc.
HNA’s ownership structure has raised concerns among banks. Bank of America Merrill Lynch has told investment bankers to stop working on transactions with HNA for now amid growing concerns about the group’s debt levels and ownership structure, people familiar with the matter told Bloomberg News last month.