Xiaomi has taken a step further to prosecute the US government on the investment ban which resists Americans from investing in the Chinese smartphone maker.
The U.S. Defense and Treasury Departments, is making move to take out the Xiaomi from a list of companies having affiliation with China’s military.
Early in the January, former US President, Donald Trump, had included the company on the Pentagon blacklist which prevents Americans from investing in the tech company. Trump had accused Xiaomi that it has strong ties with the Chinese military. This allegation was later denied. Xiaomi had tried to convince that it is not a “Communist Chinese Military Company”.
Now, in spite of the fact that Trump has been relieved of his office as the president, the investment ban still continues.
According to Reuter, in the complaint, which was addressed to the new Defense Secretary, Lloyd Austin, and the Treasury Secretary, Janet Yellen, Xiaomi has expressed their grief by calling the judgment “unlawful and unconstitutional” and stressed that the company was not being controlled by the China army.
Challenging the ban, Xiaomi has taken the step to sue the US government. An application has now been in the bid to reverse the ban order.
Xiaomi had stressed, in their court filling, should the ban continues the company will face “imminent, severe, and irreparable harm”.
The court filing read:
“This action has challenges the Trump Administration’s unlawful designation on January 14, 2021, of Plaintiff Xiaomi, a consumer electronics company, as a Communist Chinese military company (“CCMC”) subject to Executive Order 13959. As a result of that designation, U.S. persons will no longer be able to purchase publicly traded Xiaomi securities or derivatives of those securities as of March 15, 2021, and must divest their holdings by January 14, 2022. As explained below, the designation of Xiaomi as a CCMC (the “Designation”) is unlawful and should be enjoined. By failing to provide a reasoned explanation for the Designation, and by making a designation decision that necessarily runs counter to any accurate evidence before the agencies, the Departments of Defense and Treasury engaged in arbitrary and capricious decision making, in violation of the Administrative Procedure Act (“APA”),”
“As relevant here, the Order prohibits transactions by any U.S. persons in publicly traded securities of certain companies that the Department of Defense, in consultation with the Department of the Treasury, designates as a “Communist Chinese military company.” President Trump amended Executive Order 13959 on January 13, 2021. Exec. Order No. 13974, 86 Fed. Reg. 4875 (Jan. 13, 2021) (attached as Ex. B). As amended, the Order provides that the prohibitions on transactions of CCMC securities or derivatives of those securities by U.S. persons take effect 60 days after a company is designated,”
Xiaomi had earlier disclosed that it been complying with US law and made a confirmation that it’s not owned, controlled or in affiliation with the Chinese military.
More than 70% of the Xiaomi’s voting rights, were held by the co-founders, Lin Bin and Lei Jun, and not owned or controlled by any individual or entity associated with the military.