Dan David is VP and Co-Founder of GeoInvesting, widely regarded as a leader in China due diligence. Over the last seven years, GeoInvesting has identified forty companies that have been acquired at premiums, twelve U.S. halted or delisted China-based companies, and a near 100% successful list of promoted “pump and dump” campaigns that led to successful short opportunities.
Transcript
John Catsimatid: Good morning, America. This is the Cats Roundtable. John Catsimatidis here. Sunday morning, China. China is the big thing of what’s going on in the American life today, whether we know it or not.
John Catsimatid: I went to a conference last week that was called The Committee on the Present Danger, China. And with us this morning is Dan David. Dan is vice president and co-founder of Geo Investing. A leader in performing due diligence on Chinese companies and what’s going on in China.
John Catsimatid: Good morning, Dan David, how are you?
Dan David: Good morning, John. Thank you for having me.
John Catsimatid: Tell us, I went to that conference last week. I heard you speak. And I was really, really concerned about what’s going on. Tell the American people, give them the big picture before we go into specifics.
Dan David: Well, your concerns are valid. What’s going on is a systematic, unconventional, financial warfare perpetrated on the United States from China. And I don’t mean to sound alarmist, but this goes on every single day. You can see it in the documentary, The China Hustle, that shows that amazingly, this is true. It’s not illegal in China for a Chinese citizen to steal from an American citizen.
Dan David: Now, 20, 30 years ago, that probably isn’t as big of a deal as it is today. But today, there’s over one trillion dollars worth of market cap of Chinese equities on our exchanges. And they’re run by China-based individuals who are not prosecutable.
John Catsimatid: I remember back a few years ago, we were doing a financial transaction, and we were showed many Chinese companies. You know, I have a good nose, and I have some inner feelings. And I just didn’t trust the numbers. What are your feelings on that?
Dan David: As a government, China is the only government out there that would be now considered a first world financial country, right? They’re the second largest economy in the world, where nobody trusts the numbers coming out. I mean, every time China reports any of it’s GDP numbers or statistics of this kind, there becomes this conversation of, okay, now, what’s the real number?
Dan David: And, we do things there like check electricity output against last quarter or last year, to see how the economy is doing. We check things ourselves in banking. We don’t really rely on the government at all, because the government cannot really say that they’re not growing at six, seven percent, even if they’re down to three percent, which I think, is more the real number. It would cause a panic there. And in a controlled country like this, which has really gone from a plutocracy to really, an autocracy, it would cause a big problem for the government.
John Catsimatid: I had lunch a few days ago with Henry Kissinger. And you know, he helped to open up China, and he was always a pro China person. And he has concerns, too. So, it’s not just a few of us. A lot of people have concerns.
Dan David: Well, I’m a pro China person. I mean, look, we have to be. Our relationship is forever. So, we might as well make it a good relationship. So you know, I want to be clear here that it’s not the American people against Chinese people. It’s our government and their government that are really screwing this up. And, we have to have the kind of relationship that is based on mutual benefits. And not necessarily mutually shared financial destruction, right?
Dan David: You do this to my economy, I’ll do that to your economy. And that’s where we are right now. If we have the kind of relationship with China that we do with European countries and some of the other Asian countries, Japan, Australia, whatever, I think it could be good for all peoples. But that’s just not what’s happening at all.
John Catsimatid: Now, our congress in Washington is busy fighting each other. The republicans are fighting the democrats. The democrats are fighting the republicans. And the Chinese are focused, how can they outsmart us? And that’s what I really noticed, that they are focused on outsmarting us.
John Catsimatid: I heard last week also, that the Chinese students that come to America, and there’s a lot of them, that they are debriefed going and coming by the Chinese government. Do you know anything about that?
Dan David: That’s a fact, absolutely. I mean, number one, the heading of your question is, our congress fighting each other, and China outsmarting us. And that’s really not even what they have to do. When it comes to our government, especially Congress, they just have to not out dumb us. Because our Congress is factless. They are absolutely falling to the soft power of China. And the money influence that China brings to our corporations, which I can talk about. But the end of your question, yes, students coming in and out of China, they have a concern that we’re sending our idealism back to them in the general scale.
Dan David: And then, on a specific scale, maybe spying, things of this … The things they do to us, right? So, because they do it to us, they steal us intellectual properties and they do these hard transfers of assets by buying space in companies, they assume we’re going to do it to them.
Dan David: So, as a part of their control, they absolutely do have at a very minimum, questions for students coming back, sometimes pretty intensive.
John Catsimatid: And our Congress is busy of who had more sex, the republicans or the democrats? I mean, I’m joking there, but it’s more than the jokes.
Dan David: Yeah, our Congress is busy telling everybody that whatever the republican party says is a bad idea, even though it was a democratic idea 10 years ago, and vice versa, really. The republican party does the same thing. Whatever the democrats want to do, it’s a bad idea, even though it was a republican idea 10 years ago. It’s just ridiculous.
John Catsimatid: What do the American people have to do, to focus on … I mean, President Trump seems like he’s got the edge on China now. In other words, he’s got their number and he knows what has to be done. Is China going to try to delay until possibly, the 2020 elections?
Dan David: If at all possible. That is the quintessential China technique, right? It’s to agree in any meeting that you should have another meeting to discuss all of the great things that you’ve discussed in this meeting. And then, you have another meeting, followed by a conference call, followed by another meeting. And it’s just a delay tactic. I mean, how long has this negotiation been going on?
Dan David: And past that, we should focus on one or two or three pivotal, key areas of interest to the United States at any meeting with China. But, they will not do that. They will want to focus on 10 or 20 areas, and three of them are giveaways.
Dan David: You take the fentanyl problem, for instance. It’s not at all unrelated. It’s still warfare at all costs, right? So, they send more fentanyl to the United States than all other countries combined. And it’s not as if that’s not a fact. That’s such a fact that we go back to China and we say, “Not only do we know that you’re sending all of this fentanyl here, here is the person sending it. Here is his son that’s helping him send it. Here’s where they live. Here’s the factory they produce it in.” And China does nothing about it. Because they’re not selling it in China. And if they did, they’d be killed.
John Catsimatid: So in other words, they …
Dan David: So, when we go to the negotiating table, they’ll probably give that one up.
John Catsimatid: In other words, they want to use the drugs to dumb up America, and in turn, a large part of our population into zombies. And there’s no other way to say it.
Dan David: Well, I understand … Understand, they’re not going to get away with that, and they understand that, right? But they’ll make this a part of the negotiation that we’re having right now. So, when our government comes out of this negotiation, we’re not going to get, possibly, a bilateral investment treaty like we need that says if you commit a financial crime against us, the citizens of the United States or citizens in the United States, you’ll be prosecuted. But they’ll come out and say, look, they’re going to do something about the fentanyl problem. So, that’s their giveaway, because it’s so immoral that they have to stop it. I mean, they’re caught red-handed.
Dan David: But, what they don’t want to do is, stop costing us money. Everywhere and every way, even in any kind of conflict we’re involved in throughout the world, which, I think we’re involved in too many, but where we are, even for the right reasons, China will always stand opposed to us. And it costs us more money. And it costs us more influence and power, and they gain it.
Dan David: So, whatever we do in the Middle East that causes an anti-American sentiment, China goes in and takes contracts, and builds business, and does these onerous things to these countries financially. They gain, we lose.
John Catsimatid: We only have a minute left. I’d like you to give one specific thing where the Chinese company did with an American company that will give the American people an example.
Dan David: Well, I can tell you one of the first companies that we exposed. It was a company called [Pudacol 00:09:47]. And, what the CEO did is, he stole all shareholder equity to the United States. So, it accounted for about 500 million dollars. And, it was so obvious that he did this. He pledged it to a bank and took a loan against those shares, which were not his. And it defaulted, and so on. He kept the money.
Dan David: This man, [Ninjau 00:10:10] actually, eventually, admitted what he did. And because we have no bilateral investment treaty, would could not get the 500 million dollars back. We have a 400 million dollar default judgment against him. Of course, we’re not going to get that. And, what does the government of China do about this? A year later, he was appointed to Provincial Congress.
Dan David: Now, I think we know, you’re not elected to Congress in China. You’re appointed. So literally, for stealing a half a million dollars from American citizens, they’ll pin a medal on you.
John Catsimatid: And the same way with the students, I understand the students are told whatever intelligence that you can get while you’re a student in America, you report it back to us, and you will be rewarded, or your family will be rewarded. So we have to get a little bit smarter to survive, don’t you think?
Dan David: We have to get smarter. And again, a big danger here is the soft power. They’re not just told to steal intellectual property, right? I mean, a lot of these students are told to influence our professors so that, because our professors influence all of the students. And you have this influence that, if you say anything that is pro American or anti anybody else, or anti any country, you’re a racist. It’s a ridiculous thing. You look at NAFTA and our agreements there, and we start to make progress … As our president said, [inaudible 00:11:34] maybe it’s not enough, but it’s something. And then, we get accused of being bullies. And what does the Canadian President Trudeau say when this happens? He said, “Well, what [inaudible 00:11:47] it’ll be in the best interest of Canada?”
Dan David: And all the Americans are like, “Oh, good for you, being strong for Canada.” When we say things like that, we’re Nationalists.
John Catsimatid: Dan David, thank you for coming on this Sunday morning and telling America what’s going on behind the scenes with China. Look, I love the Chinese people. They’re beautiful people. They’re great people. They’re smart people.
Dan David: Right, right.
John Catsimatid: And the whole thing is, let’s not get outsmarted by them. And I think that’s the bottom line.
Dan David: Right, thank you John, and thank you for the great work you do.
John Catsimatid: Thank you. This is the Cats Roundtable. We’ll be right back.
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