Goldman Sachs Group Inc said on Tuesday it was reviewing its involvement in Megvii Technology Ltd’s planned initial public offering (IPO) after the U.S. government placed the Chinese artificial intelligence firm on a human rights blacklist.
The Trump administration said Monday that Megvii and seven other Chinese companies were targeted because they were “enabling activities contrary to the foreign policy interests of the United States”. Specifically, it said, the firms were implicated in a Chinese campaign of repression against its Muslim minority populations in the Xinjiang Uighur Autonomous Region in the far west of the country.
“We are evaluating in light of the recent developments,” Goldman said in an emailed statement in response to a request for comment on the IPO.
In its order, the U.S. Department of Commerce on Monday barred the companies as well as 20 Chinese government entities, from buying U.S. technology without U.S. government approval. That will include high-powered computer chips made by U.S. companies such as Nvidia, Intel and Qualcomm, that are considered critical for building and operating many AI systems.
Citigroup and JPMorgan both declined to comment.
Goldman had thoroughly evaluated the Megvii deal before initially signing onto it using its usual due diligence process, a person familiar with the matter said.
Megvii had filed in Hong Kong for an IPO targeting proceeds of at least $500 million.
U.N. experts and activists say at least 1 million Uighurs, and members of other largely Muslim minority groups, have been detained in camps in the remote region.
Beijing denies any mistreatment at the camps, which it says provide vocational training to help stamp out religious extremism and teach new work skills.
In its announcement of the blacklist, the U.S. government said the 28 entities had been “implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups” in the region.
Widely known for facial recognition platform Face++, Megvii will become the first Chinese AI firm to go public if the deal goes ahead. The company provides facial recognition and other AI technology to governments and companies including Alibaba, Ant Financial, Lenovo Group Ltd and Huawei.
In recent years, Chinese and some foreign investors have poured money into startup technology firms that specialize in facial and voice recognition software, as well as other surveillance equipment and software. They have been buoyed by China’s plans to build a ubiquitous CCTV surveillance network.