SpaceX loves blowing up rockets, overlooking sexual harassment and destroying the environment, but as a defense contractor, it also gets billions and billions of dollars in government contracts. As a defense contractor, we as a country also have an interest in whether or not SpaceX is being unduly influenced by hostile foreign governments. And according to newly revealed testimony from a company insider, SpaceX has taken money directly from Chinese investors, ProPublica reports. That feels like a pretty serious national security concern, but then again, SpaceX CEO Elon Musk is, himself, a walking national security concern.
As ProPublica points out, foreign investments in defense contractors aren’t outright illegal, but they are heavily regulated and monitored by the U.S. government. Or at least they were back when we were a real country that at least sort of pretended to care about things like corruption and ethics. Whether or not Co-President Stephen Miller cares now probably has more to do with what really went down between Musk and his wife a few months ago than actual concerns over national security.
As for the confirmation that SpaceX has taken Chinese investments, that comes from part of SpaceX investor Iqbaljit Kahlon’s testimony in deposition last year:
“They obviously have Chinese investors to be honest,” Iqbaljit Kahlon, a major SpaceX investor, said in a deposition last year, adding that some are “directly on the cap table.” “Cap table” refers to the company’s capitalization table, which lists its shareholders.
Kahlon’s testimony does not reveal the scope of Chinese investment in SpaceX or the identities of the investors. Kahlon has long been close with the company’s leadership and runs his own firm that acts as a middleman for wealthy investors looking to buy shares of SpaceX.
Nothing ever happens
This isn’t the first time we’ve heard about Chinese investors getting involved with SpaceX. The Financial Times previously reported that Chinese investors were buying shares in middleman firms like the one Kahlon runs that are also invested in SpaceX. It is, however, the first time we’ve gotten confirmation that SpaceX has accepted Chinese investments directly. When ProPublica spoke to several national security experts about this revelation, they said it isn’t automatically a scandal, depending on the details of those investments, but also pointed out that “the U.S. government has asserted that China has a systematic strategy of using investments in sensitive industries to conduct espionage.”
If the investors got access to nonpublic information about the company — say, details on its contracts or supply chain — it could be useful to Chinese intelligence, said Sarah Bauerle Danzman, an Indiana University professor who has worked for the State Department scrutinizing foreign investments. That “would create huge risks that, if realized, would have huge consequences for national security,” she said.
SpaceX did not respond to questions for this story. Kahlon declined to comment.
It certainly looks like Musk and the rest of SpaceX leadership know there’s something to hide, too, since testimony from the Delaware case also claimed the privately held contractor required Chinese investors to route their investments through the Cayman Islands or other countries commonly used to obscure the original source of the investments.
Will anything come of this? Will we see an actual investigation into what exactly is going on at SpaceX? Will Elon Musk lose his security clearance and his government contracts if the investigation finds any impropriety on his part? Never say never, but I certainly wouldn’t hold my breath. Investigations are only for Republicans’ political enemies now, not holding powerful people accountable. In fact, the last thing Republicans want is for any of their allies to ever be held accountable, even if it means putting national security at risk.
