Tesla and Elon Musk are reportedly under a federal probe over perks and transactions between the company, the CEO, and other companies under Musk’s control.
Last month, it was reported that a federal investigation by the DOJ was launched around reports that Elon Musk might have misused funds from Tesla for a personal project.
More specifically, reports from Bloomberg and WSJ suggested that Tesla had launched an internal investigation into Musk’s top lieutenant ordering glass through Tesla for a special project called ‘Project 42’ that might have been a house for the CEO.
Musk partly denied the report, but only by claiming that there’s “no house” nor anything planned for construction.
However, in his recent biography by Walter Isaacson, it was confirmed that Musk was looking to build a house in Austin in 2022 and even met with an architect.
Now a new report from the Wall Street Journal claims that the DOJ is expanding its probe into more transactions between Tesla and other companies controlled by Musk:
The U.S. Attorney’s Office for the Southern District of New York also has sought information about transactions between Tesla and other entities connected to the billionaire, people familiar with the investigation said. Prosecutors have referenced the involvement of a grand jury.
While none of the previous reports could directly link Project 42 to Musk, the new report claims that a corporation called Peninsula LLC has agreed to reimburse Tesla over expenses for the project and that this corporation is controlled by Jared Birchall, who is known to be Musk’s personal money manager.
Honestly, this might be some much needed oversight to keep Musk in check about his dealings between Tesla, a public company, and his many other projects and companies.
I wished this would have been a concern for Tesla’s board rather than the federal government, but I’m not sure shareholders should trust them when it comes to reining in Musk.
I’ve been growing increasingly concerned about how Musk moves talent between companies over the years, and it has become quite clear that it could a problem with the release of the new biography.
The biography describes Musk poaching critical Tesla engineers for Twitter and discussing using Tesla data for his new AI startup.
Tesla is a public company and it can be problematic if Musk can feel like he can use or move resources from the company to other entities like he wants just because he is the CEO.
Also, I think it’s important to take Musk’s denial with a grain of salt. I’ve been covering him for almost a decade now and if there’s one thing that I’ve come to realize is that while he might be committed to the truth, he is not above playing with semantics.
Like with his attempt to kill that latest WSJ story by asking “where is the house” and saying that he “doesn’t plan to build a house”, that’s not a direct denial of the Project 42 report. He is just saying that the house was never built and he doesn’t plan to build it.
That very well might be true, but it doesn’t mean that there was no wrongdoing around the project either.