Political leaders and members of the public had raised questions after Nongfu Spring acquired the property at 80 Northwest Blvd. Some worried about the property’s proximity to US military facilities and defense contractors. Others focused on potential impacts to the local water supply.
The “negative press” that ensued generated frustration for business stakeholders, according to the DOJ report. Some news reports had noted the $67 million purchase price was more than quadruple the property’s assessed value of about $15 million. But sources told investigators that “the selling price is not widely regarded as exceeding market-value,” the report states.
“In fact, the property was reportedly one of the few structures of its size in New England available at the time that was capable of meeting the bottling company’s structural and technical requirements,” the report adds.
State lawmakers enacted legislation in June as part of the state budget to bar certain foreign businesses and government officials from acquiring a controlling interest in New Hampshire real estate. Those new restrictions apply to Russia, Iran, Syria, North Korea, and China. But they took effect after the Nongfu Spring deal was finalized.
Most states across the country have adopted legislation to restrict certain types of foreign property ownership, though New Hampshire is an outlier among New England states, according to data compiled by the Committee of 100, a nonprofit that promotes US-China relations. While proponents often say such restrictions protect national security interests, critics often express concerns about biases against people from certain parts of the world.
A state employee in New Hampshire helped Nongfu Spring for much of last year. He fielded questions and arranged for local experts and authorities to meet with representatives from Nongfu Spring, including when they toured the Nashua property last year — but he didn’t actively recruit the company to New Hampshire, didn’t violate any state or federal law, and didn’t breach any existing state or department policy, according to the DOJ report.
That said, the DOJ recommended that the Department of Business and Economic Affairs adopt certain safeguards to ensure the businesses it helps aren’t implicated in any state or federal law, regulation, or policy that bars certain foreign entities from buying property in the state — and the DOJ report said those “process improvements” have already been adopted.
Moving forward, when a third party seeks assistance from the department on behalf of a confidential client, they must affirm in writing that their client doesn’t originate from any country listed in the new state law or an existing federal executive order. The department has also adopted a foreign entity screening checklist and begun requiring staff to notify their supervisor in writing immediately, according to the DOJ report.
A spokesperson for Nongfu Spring did not immediately respond to a request for comment.
Three members of the state’s five-person Executive Council — Joseph Kenney, John Stephen, and David K. Wheeler, all Republicans — issued a joint statement Monday saying the updated processes don’t go far enough. They recommended that the department also begin submitting quarterly reports to the council with details on any foreign companies engaging with or seeking to engage with the department.
The three executive councilors also said the department needs to independently confirm that the US Department of the Treasury or the Committee on Foreign Investment in the United States (CFIUS) has granted approval to a foreign company before the state department begins any work with the company.
“We find there has been an appalling lack of communication with the public, and a troubling absence of community engagement or public hearings related to this sale — despite its significant potential impact on the water supply of an entire community,” Kenney, Stephen, and Wheeler said.
The same three executive councilors recently opposed giving Taylor Caswell another term as the head of the Department of Business and Economic Affairs. Caswell is resigning this month, despite having support from Ayotte and two executive councilors.
Ayotte thanked Formella for the report and signed two executive orders on Monday, saying her actions would help to ensure “the Chinese Communist Party and other hostile groups are not doing business with our state government.”
The first executive order rescinded an order that former Governor Chris Sununu had signed in 2022 and replaced it with directions for state entities to prevent the use of certain prohibited technology and services on government systems.
The second executive order told the DOJ to issue guidance on the new state law and directed state entities to ensure prohibited parties aren’t involved in any transactions involving the state’s real property.
Steven Porter can be reached at steven.porter@globe.com. Follow him @reporterporter.
