Government-connected tech CEO at Trump meeting raises red flags
As top executives from the world's biggest technology companies paraded through Trump Tower for a meeting with the president-elect, one particular participant stood out: Alex Karp.
Unlike the other attendees, like Apple CEO Tim Cook , Amazon.com CEO Jeff Bezos and Alphabet CEO Larry Page , who oversee companies worth hundreds of billions of dollars, Karp runs a privately held business valued at $20 billion, one that's hardly known outside of Silicon Valley and Washington.
Karp's company is Palantir Technologies , a Palo Alto, California-based software developer that's backed by the CIA's venture arm and has done work for government agencies including the FBI, the Pentagon and IRS.
Given how much smaller Palantir is than the other companies represented, why was Karp invited to meet with Donald Trump ?
The most obvious reason contains little subtlety. Peter Thiel , the venture capitalist and Facebook (NASDAQ: FB) board member who is part of Trump's transition team, is a co-founder of Palantir and is the company's biggest backer.
Karp's presence may or may not represent an actual conflict of interest, but the appearance of one is hard to deny, according to Norman Eisen, a former U.S. ambassador to the Czech Republic who worked on President Barack Obama's ethics initiatives.
"It raises profound questions as to whether there has been the use of the transition to try to enhance the profile and value of Mr. Thiel's company," Eisen said. "For a campaign that ran on `drain the swamp,' it seems to me like they just threw another alligator in the swamp."
A spokesperson for Thiel, who is a partner at San Francisco-based venture firm Founders Fund, didn't respond to a request for comment. Representatives of Palantir and the Trump transition also didn't respond.
Other tech executives at Wednesday's meeting were the Alphabet (NASDAQ: GOOGL) Chairman Eric Schmidt, and the CEOs of Cisco (NASDAQ: CSCO), IBM (NYSE: IBM), Intel (NASDAQ: INTC), Microsoft (NASDAQ: MSFT) (along with President Brad Smith), Oracle (NYSE: ORCL) and Tesla Motors and the COO of Facebook.
With the exception of Tesla (NASDAQ: TSLA), which is run by the iconic SpaceX founder Elon Musk , every one of those companies is worth at least $153 billion .
Palantir is not only valued at a fraction of that, but it's also in a particularly sensitive spot. The company's software allows corporations and government agencies to analyze massive amounts of data. Palantir received about $83 million from the government this year tied to 71 transactions, according to USASpending.gov.
Heading into a new administration run by a political novice, snagging face time with the person calling the shots can't hurt.
Trump's transition does have a code of ethics, and the first requirement is that a member of the team will withdraw from "involvement in any particular transition matter which to my knowledge may directly conflict with a financial interest of mine, my spouse, minor child, partner, client or other individual or organization with which I have a business or close personal relationship."
Earlier this month, a Thiel spokesperson declined to say if he signed the agreement.
Of course, Thiel's potential conflicts pale in comparison to what Trump is facing. The president-elect has real estate interests across the globe and, rather than divesting his assets, said he's handing control to three of his children.
The three — Eric, Ivanka and Donald Trump Jr. — were at Wednesday's tech meeting. Trump had scheduled a press conference for this week to discuss his plans for removing himself from his company, but he postponed that event until at least next month.
The Karp presence, according to Eisen, is just another example of Trump's cavalier attitude toward ethics and potential conflicts of interest.
"I don't like the way it looks having Karp in that room," Eisen said. "Even if it had a much larger market cap or if he were a much bigger personality, it still looks as if [Thiel] is using the transition for personal advancement."
— CNBC's Anita Balakrishnan contributed to this report.
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