Kelly Helped Secure Chinese Tech Giant's Stake in Firm
Mark Kelly, the former NASA astronaut trying to oust Arizona GOP Sen. Martha McSally, the first female fighter pilot to fly in combat, was far more involved in facilitating a Chinese investment in a space exploration company Kelly co-founded than his campaign has previously acknowledged, according to Chinese news reports quoting the company’s then-CEO Jane Poynter and statements Poynter made to RealClearPolitics.
The story from officials at World View, the company Kelly co-founded, about Chinese tech giant Tencent’s involvement in the company also has shifted in recent weeks as it’s faced more media scrutiny for its decision to accept two sets of investments from the Chinese company.
Tencent is one of the world’s largest internet enterprises and the owner of the popular Chinese social media platform WeChat, a texting application with more than a billion users. In recent years, it has faced international scrutiny over widespread suspicions and reports that it monitors the activity of many of its users both inside and outside China.
Those security fears have only increased this year amid the coronavirus pandemic and rising concerns about Chinese disinformation, spying and surveillance. A recent University of Toronto study found that WeChat has been censoring keywords relating to the COVID-19 outbreak since at least Jan. 1. Just last week, India banned Tencent’s WeChat app over concerns that it was secretly stealing users’ data and sending it back to China.
Critics of U.S. companies with Chinese investors, including World View, say the Chinese government uses the business relationships to steal U.S. defense and tech secrets and boost its own economy, at America’s expense.
In 2012 Kelly and several other former NASA astronauts and space-exploration experts founded World View, an Arizona-based company offering to take scientific instruments and people into earth’s stratosphere. At first the company focused on space tourism as its business model, with plans to charge $75,000 per commercial passenger on flights to near outer space in a capsule attached to a huge helium balloon.
In recent years, however, the company has increasingly shifted to contracting with NASA and the Department of Defense to use the balloon, known as a Stratollite, to carry unmanned payloads for extended periods and provide imagery of the Earth with a resolution sharp to five centimeters, far better than satellites can offer.
Kelly served as a strategic adviser to World View until launching his Senate campaign last year. He maintains a $100,000-$250,000 financial stake in the company in non-public stock and stock options of $15,001 and $50,000, according to the financial disclosure records Kelly filed in his Senate bid. His eldest daughter also works there as the company’s business opportunity manager.
Additionally, Kelly’s campaign has accepted at least $5,000 from David Wallerstein, Tencent’s chief exploration officer, responsible for the company’s operations outside mainland China and business initiatives with multinational partners. Wallerstein’s North American investment company, called Mount McKinley, is a subsidiary of Tencent and shares an address with Tencent’s headquarters in China.
Tencent’s Early Investments in World View
In the fall of 2014, Jane Poynter, the then-CEO of World View Enterprises, announced during a visit to Beijing that Tencent had invested an undisclosed sum in the Tucson-based venture. In April 2016, as part of a subsequent, $15 million investment round, World View announced that it had received more funds from Tencent, along with three other venture capital firms. Poynter, a co-founder of World View along with Kelly and several others, stepped down as CEO in early 2019 but remains involved in the company as a strategic adviser, board member and minority owner. She donated $750 to Kelly’s Democratic Senate campaign last year.
Chinese news reports from November 2014 quoting Poynter show that Kelly was instrumental in securing the Tencent investment. In an article in the Oriental Morning Post, translated from Mandarin, Poynter is quoted as saying that a “Tencent American leader named David met Mark Kelly, a space pilot of our team.”
“After Mark introduced him to space travel technology, David was very interested and willing to invest at this stage,” she added. “When I choose a partner, I value the contribution this partner can bring to the project, and Tencent can push our cooperation to China. I think it is very important.”
The company did not respond to three RCP requests to clarify Poynter’s statements about Kelly’s role in facilitating the Tencent investments and what Poynter meant when she touted Tencent’s ability to “push our cooperation to China.”
Another article in English-language China Daily elaborated on how Tencent became involved in World View. Poynter told the paper that Wallerstein “has already met with one of World View's pilots and exchanged ideas on future technology, and that she considered the passion and contribution that Tencent could give to the project of huge significance to her operation.”
Jacob Peters, a Kelly campaign spokesman, confirmed that Kelly was a World View co-founder and that “in the early stages he spoke to many people about his experiences as a pilot and astronaut.”
He argued that Tencent has “no influence in the company’s day-to-day business,” and referred questions about the company’s future to World View.
Pressed on whether Kelly provided Wallerstein or anyone else at Tencent information about World View’s space technology, Peters said, “No, he didn’t,” but did not respond to a follow-up question about whether Poynter had mischaracterized his meetings with Wallerstein in the Chinese media reports.
In May, Peters said Kelly’s experience as a U.S. Navy combat veteran who served in the Pacific made him keenly aware of China’s position as an “adversary and a threat to American interests.”
“Mark’s experience as a pilot and astronaut enabled him to help found World View in Tucson, which has worked with the Department of Defense and NASA among others while creating jobs and generating millions in economic impact” Peters said then.
'No Technology to Be Talking About'
Reached by phone Wednesday, Poynter said she is “150 percent sure that Kelly and Wallerstein did not have a deep technology conversation” in 2014 and that the conversations Kelly had with Wallerstein, “If he had more than one,” were “very brief” and “superficial” with “no detail whatsoever.”
“Mark was not involved in the day-to-day operations of the company,” she told RCP, referring specific questions to World View. “… He probably talked about the human travel idea because in 2014 it was frankly just an idea – the idea of taking people [into space] in a balloon.”
“There was no technology to be talking about at the time – the idea of a Stratollite came years later,” she added, noting that she was not present for the conversation.“All I’m saying is – I don’t know if it was at a cocktail party. I don’t remember where he bumped into David. I think he had a very brief conversation and handed him off to me,” she said.
She said she could not remember if Tencent held a seat on World View’s board and then expressed discomfort with the conversation. Before abruptly ending the call, she praised Kelly’s service to the country for his many years of work at NASA and the Navy.
“Mark Kelly has the most integrity of anybody I know, and he has served this country flawlessly, so I will not engage in this conversation that is trying to undermine that,” she said, before hanging up.
Ashley Smith, a World View spokeswoman, previously downplayed Tencent’s level of investment, saying it came from Tencent subsidiary Mount McKinley, “an early investor” that now maintains “less than 5% in common stock.”
“They do not have a seat on the board, means of control, or any access to inside information about the company or its technology,” she told RCP in May.
Since World View has shifted its focus to the unmanned Stratollite for Earth observation, which has defense applications, Smith said, “World View has not taken foreign investment and has reported all foreign interest and its entire ownership structure to the Defense Counterintelligence Security Agency (DCSA) to obtain security and facility clearance.”
The DCSA “has concluded that foreign interests do not have any influence, control or authority over World View,” Smith added.
However, several days later Smith told the Arizona Mirror that Mount McKinley hasn’t had a seat on World View’s board of directors “in three years” and has no “means of control” and no access to information. RCP pressed her on that information, noting that three years ago, World View was involved in working on a $440,000 NASA contract that began in 2015, according to USAspending.gov. She then asserted that neither Mount McKinley nor its parent company Tencent ever held a seat on the board even though Mount McKinley had an option to hold one.
“When they had the option to – which they no longer do – they did not name a board member,” she told RCP in late May.
U.S. foreign policy experts have long warned about Chinese investments in the U.S. space and tech industries, especially when it comes to Tencent and other social media platforms. FBI Director Christopher Wray on Tuesday warned that the Chinese government’s theft of American information is taking place on so large a scale that suspected incidents make up nearly half of his bureau’s counterintelligence cases. Wray pointed to a “wide range of actors – including not just Chinese intelligence services, but state-owned enterprises, ostensibly private companies, certain kinds of graduate students and researchers … working on their behalf.”
In some cases, Wray said, China uses social media platforms popular with Americans “to identify people with access to our government’s sensitive information and then target those people to try to steal it.”
Communist Party Controls Investments
Robert Spalding is a former U.S. Air Force brigadier general and senior fellow at the conservative-leaning Hudson Institute whose work focuses on U.S.-China relations. Spalding said Chinese investment in the U.S. space and aeronautics industries should raise deep concerns because of the basic risk of “eroding U.S. economic competitiveness and our ability to supply our military defenses while undermining our military advantages” against the Chinese, he said.
As a former B-2 pilot and author of the book, “Stealth War: How China Took Over While America’s Elite Slept,” Spalding said he would be extremely wary of Chinese investment in any type of U.S. space company, especially if the company were involved in defense and NASA contracts.
“Any Chinese company that wanted to invest in a U.S. space company – I would not entertain that,” he told RCP in an interview. “Chinese investments are strictly controlled by the Chinese Communist Party. Their capital is strategically oriented with state interests. It’s not private investment. It’s national investment. The CCP controls the banking system and all the money coming out of China through Chinese companies.”
In late 2018, another Hudson Institute scholar warned in an opinion piece that “China is infiltrating the U.S. space industry with investments.” The article highlighted a case in which Boeing abruptly canceled a controversial satellite order with Global IP, a Los Angeles-based start-up, after a Wall Street Journal report exposed a $200 million investment by a Chinese company in the venture. Under U.S. export-control laws, Boeing is barred from selling satellites to China directly.
The op-ed also noted Tencent’s investment in World View, along with Moon Express, a commercial lunar exploration company that has worked closely with NASA on a program that partners with commercial entities on delivering payloads to the moon. Another Tencent investment project is the U.S.-based Planetary Resources, which has a stated goal of expanding “Earth’s natural resource base by developing and deploying the technologies for asteroid mining.”
With tensions between China and the United States running high over Beijing’s role in suppressing information about the Wuhan coronavirus outbreak early on, the U.S. and other Western countries are scrutinizing Tencent and other Chinese companies’ activities and investments.
In addition to the surveillance suspicions, Tencent last year sparked a U.S. backlash for suspending its streaming of National Basketball Association games after the Houston Rockets’ general manager praised Hong Kong democracy protests last fall.
In deciding to ban Tencent’s WeChat just last week, the Indian minister of electronics and information technology called the issue “a matter of very deep and immediate concern which requires emergency measures.”
Kelly’s aversion to discussing Tencent’s investment in World View comes at a time when other lawmakers are making a priority of disclosing financial ties to the Chinese tech behemoth.
Rep. Michael McCaul, the ranking Republican on the House Foreign Affairs Committee, recently disclosed his wife’s investment in Tencent, acknowledging her purchase of $50,000 to $100,000 in company stock. A lawyer for McCaul told Politico in May that “a third-party manager made the [Tencent stock] purchase without direction” from McCaul’s wife. As a member of Congress, McCaul is required to make public certain assets his spouse owns, and McCaul has done so for years. But aschair of the House GOP’s China Task Force, McCaul also has denounced Tencent as a threat to U.S. national security and part of “a dystopian” plot the Chinese Communist Party uses to monitor and “score its citizens’ behavior.”