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Ant Financial hits back at national security claims

By He Wei in Shanghai | | Updated: 2017-04-13 21:09
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Ant Financial Services Group has lashed out at rival Euronet Worldwide in an increasingly hostile battle for a United States money transfer company.

In January, Ant Financial announced plans to buy MoneyGram for $880 million but was hit with a counter bid of $940 million from Euronet which claims to have a better chance of closing the deal because it's not subject to national security probes that foreign investors are subject to.

Euronet chief executive officer Mike Brown said earlier this week that a deal with the Chinese company posed a risk to national security and was unlikely to get clearance from US regulators due to the proximity of many MoneyGram vendors to US military bases.

“Euronet has conducted broad-based political attacks in Washington against Ant Financial and the integrity of MoneyGram's business and data security practices, in an attempt to stop a compelling transaction involving a core competitor,” Doug Feagin, president of Ant Financial International, said in a statement.

The Committee on Foreign Investment in the US has the power to veto foreign investments if it concludes that national security is being threatened.

Brown's comments have outraged Ant Financial.

“Euronet has sought to create phantom national security arguments and encouraged political interference in a commercial transaction," Feagin said. "A closer examination of Euronet's self-serving claims demonstrates that its hostile bid for MoneyGram does nothing to advance American interests."

He said Euronet has over 85 percent of its assets outside of the US, including nearly all of Euronet's servers and data centers where its customer information resides.

He also claimed that Euronet derives only 28 percent of its revenue from the US and pays virtually no tax in the country, according to its annual report to shareholders.

“Besides, Euronet has told investors it plans to cut $60 million in costs if it acquires MoneyGram, which would inevitably impact US facilities and employment, leading to significant US job cuts,” he said.

If Ant Financial proceeds with the acquisition, Feagin said MoneyGram would continue to independently operate all its data systems and Ant Financial would not have access to any US customer data.

“Additionally, the entire Texas-based MoneyGram management team and all of its employees in the US, including the data security team, will remain in place at MoneyGram,” he noted.

The Chinese e-payment giant remained confident of closing the transaction and fulfilling the shared mission of serving people who don't use traditional banks with MoneyGram.

Alex Holmes, chief executive officer of MoneyGram, has also refuted Brown’s claims in a Financial Times interview published on Wednesday.

“The reality is that we collect and transmit a limited amount of personally identifiable information from most of our customers. This information is stored at our secure IT facility in the US. These practices will continue unchanged under our proposed merger with Ant Financial,” Holmes was quoted by the newspaper as saying.

He added that MoneyGram would remain subject to examinations and audits by US regulators while operating independently from Ant with respect to data collection.

Feagin said Ant Financial intends to invest significant additional money and resources in MoneyGram, including expenditures to maintain the highest standards of data security and user privacy.

Ant Financial is China's biggest internet-finance conglomerate, with its online payment and escrow service, a money-market fund, a credit-rating system and an internet bank. It has set a target of having 2 billion customers globally over the next decade.

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