It might get awkward for some of Afterpay's US employees and option holders after the group's shares surged 24 per cent higher to $36.10 on news China's Tencent has bought a 5 per cent stake in the business.The 100,000 share options of former US Treasury secretary (and now Afterpay US advisory board member) Larry Summers exercisable at $31.90 each shot up in value by $420,000 over Monday's trading session, thanks to the Tencent deal.Republican Senator Ted Cruz says Tencent is a "glorified surveillance arm" of the Chinese Communist Party. APHowever, the deal won't be so popular among powerful US lawmakers.On April 30, US Senator from Texas Ted Cruz tabled legislation that would ban all federal employees from conducting official business over platforms run by Tencent, Huawei and ZTE, among other companies, which the US State Department views as controlled by the Chinese Communist Party (CCP).The proposed legislation might also explain Tencent's rush to grab a strategic stake in the payments giant before, like Huawei, it gets elbowed out of overseas markets as a stand-alone player altogether.
According to Republican Senators Cruz and Josh Hawley, Tencent is a "glorified surveillance arm" of the CCP, which actively conspires "to conduct international surveillance and present an ongoing threat to the United States and our allies."The Countering Chinese Attempts at Snooping Act, or CCAS, would also stop Tencent from operating in the US on the grounds it's an "espionage operation" masquerading as a telecom. The proposed new laws also aim to forbid US taxpayers' dollars from being used to help capitalise Chinese espionage infrastructure.It's unclear, if passed, what kind of impact the legislation would have upon companies where designated US public enemies are minority investors. But the brand damage alone could be devastating.Amidst a wave of anti-China sentiment in the US Congress, Afterpay's ownership structure might also start to cause the Teflon operator some painful political headaches.Summers might have to earn the value in those options by lobbying furiously against the passing of the CCAS Act. If the Washington grandee will stoop to get his hands dirty.
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