U.S. Investigating Covert Chinese Radio Broadcast Network

By Laura Wagner

Published November 3, 2015 at 4:03 PM EST

The Federal Communications Commission announced an investigation into a California firm after a Reuters report revealed that its radio broadcasts are backed by the Chinese government.

The firm is owned by James Su, a naturalized U.S. citizen born in Shanghai, but his company, G&E Studio Inc., "is 60 percent owned by a subsidiary of Chinese state-run radio broadcaster China Radio International," Reuters reported.

"Based on reports, the FCC will initiate an inquiry into the facts surrounding the foreign ownership issues raised in the stories, including whether the Commission's statutory foreign ownership rules have been violated," FCC spokesman Neil Grace said in a statement.

The rules stipulate that foreign individuals, governments and corporations are permitted to hold up to 20 percent ownership directly in a station and up to 25 percent in the U.S. parent corporation of a station.

Su, however, told Reuters his company is doing nothing illegal because it doesn't own the stations; it leases air time:

"In a Sept. 16 interview at his offices near Los Angeles, G&E president and CEO James Su confirmed that CRI subsidiary Guoguang Century Media holds a majority stake in his company and that he has a contract with the Chinese broadcaster. He said that a non-disclosure agreement bars him from divulging details.

"Su said he complies with U.S. laws. G&E doesn't own stations, but rather leases the airtime on them. 'It's like a management company that manages a condominium,' he said."

U.S. law also requires anyone seeking to influence U.S. public opinion on behalf of foreign agents to register with the Justice Department in accordance with the .

Reuters adds that Su's company had not registered with FARA, but said the Justice Department would neither confirm nor deny an investigation into the company.

The report revealed that this alleged violation is larger than just one company. It showed that CRI is the majority shareholder behind broadcasts in a number of cities in the U.S., including Washington, Philadelphia, Boston, Houston and San Francisco, and around the world in 14 countries.