Germany Seeks to Ease Lawmakers’ Fears of Thiel Drone Firm Stake

Germany is looking to dispel concerns that its planned €3 billion ($3.5 billion) order for attack drones from a Peter Thiel-backed defense start-up could pose a security threat due to the role of the controversial US investor.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Germany is looking to dispel concerns that its planned €3 billion ($3.5 billion) order for attack drones from a Peter Thiel-backed defense start-up could pose a security threat due to the role of the controversial US investor.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The defense ministry told lawmakers in a confidential briefing on Thursday that Thiel is only one of many minority shareholders at Stark Defense through his investment company Thiel Capital, according to people familiar with the discussion. Berlin-based Stark is majority-owned by its founding team and employees, with the remaining shares distributed among about 50 different shareholders.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Lawmakers were told that Thiel’s stake remains below 10%, that he’s not a member of the supervisory board, and that there are no control or other special rights that give him insight into or influence over the operational management of the company. No shareholder, including Thiel, has access to Stark’s technology or influence over its research and development decisions, the lawmakers were told. For the intended conclusion of the contract, confidentiality clauses ensure that only the personnel involved in the implementation within the company will have access to confidential information, it was said.If Thiel’s potential stake were to exceed the 10% threshold, though, it would trigger an investment review by the economy and energy ministry in Berlin and give the German government the option of blocking the higher stake at any time, the defense ministry told lawmakers.A Stark spokeswoman said the information provided by the defense ministry about Thiel’s role and influence at Stark Defense were accurate. She added she was not aware of any plans that Thiel might increase his stake.The German defense ministry declined to comment. A Thiel spokesperson didn’t immediately reply to a written request for comment outside European business hours.German lawmakers are set to approve two military procurement orders for loitering munition systems (LMS), also known as attack or kamikaze drones, during a closed-door meeting on Feb. 25, according to people familiar with the matter.Stark will get a first tranche of roughly €270 million from an overall contract of €2.9 billion, and competing start-up Helsing will get the same amount from an overall contract of €1.5 billion, the people said.The Virtus system from Stark is capable of vertical take-off and landing, meaning it can take off and land independently without a launch device and can therefore be used multiple times, lawmakers were told.The HX-2 system from Helsing doesn’t have those capabilities and requires a catapult for launch, it was said. In addition, Helsing is already selling its HX-2 to numerous other countries so the costs for development and the establishment of resilient production capacities are spread across a larger number of customers.The Stark spokeswoman also said that the higher price for its system was related to its capabilities of vertical take-off and landing. This means it can be deployed within 10 minutes from any terrain, without requiring additional launch infrastructure, the spokeswoman said. As vertical take-off allows deployment from covered positions, the system also reduces operator exposure and increases tactical flexibility, the spokeswoman added. Its design also enables immediate relocation after launch, a feature that can reduce the risk for the operator, she said.Virtus has a wider range of up to 130 km and can carry a heavier warhead with up to 5 kg payload, enabling it to engage high-value targets, the spokeswoman added.The first loitering munition is scheduled to be delivered to the German armored brigade in Lithuania in October, and the final shipment is expected in seven years, the people added.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.