At least one member of a federal watchdog group urged an espionage investigation into the founders and CEO of autonomous truck developer TuSimple Holdings, The Wall Street Journal reported Wednesday. But the company denied the report and said it continues to cooperate with the Committee on Foreign Investment in the United States (CFIUS).
The recommendation for criminal charges was made late last year. It stemmed from concerns that TuSimple’s two founders and the current chief executive improperly transferred technology to a Chinese startup, the newspaper reported.
CFIUS does not have authority in its charter to recommend criminal charges. But any individual member could go to the Department of Justice. CFIUS is an interagency committee led by the Department of Treasury. It is authorized to review certain transactions involving foreign investment in the United States.
“We take our responsibility to our stakeholders and the obligations under our national security agreement with CFIUS seriously,” TuSimple said in a statement. “We continue to be in regular communication with CFIUS. And the allegations made by the anonymous sources are not consistent with our discussions with them.”
Previous investigation led to government oversight
CFIUS investigated TuSimple in 2021 around the time of its initial public offering and listing on the Nasdaq. TuSimple made some changes to its board structure, and Chinese media conglomerate Sina Corp. reduced its holdings in TuSimple.
The company agreed to comply with a National Security Agreement as part of limited federal oversight. It created a security committee to assure that U.S.-created intellectual property was not shared with its China operations.
Boardroom drama embroils TuSimple
Last fall, TuSimple became embroiled in a boardroom drama. Co-founder Xiaodi Hou was fired by the board of directors. They accused him of a lack of transparency about dealings with a hydrogen fuel cell startup called Hydron Inc. TuSimple’s other co-founder, Mo Chen, founded Hydron.
“As we have previously disclosed, while the investigation is ongoing, the information shared with Hydron that we have seen is the same type of information shared with other potential truck manufacturing partners so those vehicles can be custom built to be compatible with our technology,” TuSimple said.
TuSimple co-founders fire independent directors
Ten days after Hou was fired on Oct. 30, he and Chen exercised their super-voting majority and fired the company’s four independent directors. That briefly left Hou as the sole board member. Hou brought back Chen, who had resigned as executive chairman in June. And he rehired Cheng Lu, the former CEO ousted when Hou suddenly took over as CEO in March.
Chen currently has sole control of the company after Hou ceded his voting rights, giving Chen 59% of the voting power.
New independent directors appointed and 350 employees laid off
TuSimple has appointed new independent board members, including Michael Mosier as government security director. He oversees TuSimple’s National Security Agreement compliance. Mosier worked in national security roles at the departments of Treasury and Justice and with the White House National Security Council.
Under Lu, TuSimple laid off 350 employees — a third of its workforce — in December and dramatically cut back its autonomous freight operations, which generated some revenue but was tangential to TuSimple’s technology mission, Lu said at the time of the layoffs.
All of the drama led to a dramatic sell-off of TuSimple shares, which closed Wednesday at $2.38, up 13.33% but well off its 52-week high of $20.28.
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