by Mitch Kokai
Senior Political Analyst, John Locke Foundation
China’s Tencent profited off fraudulent federal COVID relief program loans, according to court records reviewed by the Washington Free Beacon.
The court records reveal that Tencent co-owned one of the main investors in Womply, a San Francisco startup that raked in $2 billion in 2021 by helping businesses get expedited Paycheck Protection Program loans—and which was accused of profiting from “rampant fraud” in the application process.
Tencent, which also owns WeChat and a large stake in the parent company of TikTok, has faced scrutiny by the U.S. government over national security risks. In 2021, the Trump administration issued an executive order banning transactions with Tencent due to its connections to the Chinese government. President Joe Biden rescinded the ban after taking office, but ordered a security review of the company’s apps.
Tencent’s financial ties to Womply could raise new questions about abuse of the PPP program, despite efforts from lawmakers to prevent foreign entities from profiting. The Small Business Administration, which oversaw the disbursement of nearly $800 billion in taxpayer funds throughout the pandemic, estimates that more than $200 billion was awarded to “potentially fraudulent actors,” according to a June inspector general report.
“Congress approved Paycheck Protection Program loans to prevent a recession from huge wave of layoffs—not to send taxpayer dollars to China,” said Gabriel Noronha, a former State Department official who now serves as the executive director of the Polaris National Security think tank. “It’s unacceptable that the parent company of TikTok is making money off government fraud—especially when we’re in the middle of increasing debt and national security crises.”
The news comes less than a year after the House Select Subcommittee on the Coronavirus Crisis released a report detailing Womply’s failures to weed out blatantly bogus loan applications.