The Small Business Administration’s watchdog has been asked to investigate after a Virginia radio company that was paid millions of dollars to broadcast Chinese Communist Party propaganda received more than $100,000 through the Paycheck Protection Program.
Potomac Radio Group, which registered this month under the Foreign Agents Registration Act for its work for Chinese state-run China Global Television Network, received a loan for $106,228 through the SBA in April 2020, with the loan forgiven by the U.S. government eight months later. A source familiar with the matter told the Washington Examiner that SBA has had fraud experts undertake a post-forgiveness review of the loan and has also referred the controversy to the SBA inspector general to investigate.
Potomac owns WCRW AM 1190, which is heard in Virginia, Maryland, and Washington, D.C. The company admitted it has been paid close to $4.4 million by CGTN and CCP-affiliated China Radio International throughout 2019, 2020, and 2021.
“The SBA does not comment on individual borrowers. The SBA takes fraud seriously, and, as such, all applicants are required to provide certification of their eligibility upon application,” Shannon Giles, a public affairs officer with SBA, told the Washington Examiner. “Misrepresentation of eligibility is unlawful, and, when appropriate, these cases are referred to the Office of the Inspector General. The Office of Inspector General and the agency’s federal partners are working diligently to resolve the fraud incidents.”
Potomac co-owner Brian Lane told the Washington Examiner, “We do not comment on potential or ongoing government communications” but that “we believe we fully complied with the rules and process.”
Sheldon Shoemaker, SBA’s assistant inspector for management and operations, told the Washington Examiner that “it is OIG’s practice to not confirm or to deny investigative activity.”
D.C. RADIO STATION BROADCASTS CCP PROPAGANDA
Congress added stricter loan eligibility requirements when the follow-up Economic Aid Act became law in December 2020. SBA’s rules for 2021 note the law “prohibits several additional categories of borrowers from receiving a Second Draw PPP Loan” including “certain entities organized under the laws of the People’s Republic of China” as well as “any person required to submit a registration statement” under FARA.
The source insisted a company like Potomac would now be deemed ineligible for a PPP loan because it would’ve been categorized as a business engaged in lobbying.
Horizon Advisory, a strategy consulting firm, released a report in August 2020 contending that $192 million to $419 million in PPP loans had been provided to more than 125 companies owned or invested in by Chinese entities, and that at least 32 Chinese companies received loans worth more than $1 million, totaling between $85 million and $180 million. Those numbers have undoubtedly grown since then.
“The CCP treats COVID-19 recovery as a competitive interaction,” the study's authors wrote, adding, “The extent and nature of PRC-owned, PRC-invested, and PRC-connected entities among the PPP loan recipients indicate that without appropriate policy guardrails, U.S. tax dollars intended for relief, recovery, and growth of the U.S. economy — and small businesses in particular — risk supporting foreign competitors, namely China.”
Republican Sen. Marco Rubio introduced the Preventing SBA Assistance From Going to China Act in March 2021, aiming to take further action to block any SBA assistance from going to Chinese entities.
“American businesses are no stranger to the wide range of strategies Chinese firms use to starve out their competition," the Florida Republican said. "Exploiting taxpayer-subsidized SBA programs designed to boost our small businesses is among the most egregious.”
Potomac’s WCRW launched The Bridge podcast in August 2020, with the show co-hosted by Chicago-based John St. Augustine and CRI’s Zhou Heyang. Episodes of the podcast have featured St. Augustine and Zhou praising China’s response to the coronavirus pandemic, while St. Augustine has repeatedly attacked Americans and the U.S. response and said he does not care where COVID-19 originated.
At the urging of the Trump Justice Department, CGTN registered as a foreign agent of China in 2019. The Trump State Department designated CGTN and CRI as “foreign missions” of China in 2020.
Potomac acquired WUST and WCRW in 2019, with WUST broadcasting religious Spanish content and WCRW broadcasting CRI programming for years.
“We applied for the loan for both our stations. The Spanish pastors were having difficulty with maintaining their churches during COVID and were unable to come into the studios to do their shows,” Lane told the Washington Examiner, claiming that the loan was only used for WUST, adding, "After the sale of WUST, we did not apply for the second round of PPP loans.”
Potomac’s FARA filings showed that before the April 2020 loan, it received $527,627 from CGTN in July 2019, $804,119 in August 2019, and $259,872 in September 2019, and has received millions from the CCP since then.
Lane said that “we have ended some of our business with them and are reviewing our options at the moment, including the sale of the station.”
The FARA filing said the “foreign principal” for Potomac is CGTN, which is under the control of the CCP’s Publicity Department.
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Potomac said it purchased the station in January 2019 and "has continued to air the programming materials prepared for broadcast by CGTN.”
“We are not agents of the CCP,” Lane insisted. "The previous owners consulted with the Department of Justice in 2015 and were not required to register. ... However, the views of the DOJ have evolved since then … Though we continue to believe that we did not need to register, we did.”
DOJ spokesman Wyn Hornbuckle told the Washington Examiner that the Justice Department “will neither confirm nor deny the existence of an ongoing investigation.”