By: Creating Future Us
July 14, 2020
As Palantir confidentially files to go public, responsible investors might viably ask: Is this a company that has credible ESG credentials inviting participation, if it proceeds with its IPO?
Considering that Palantir Technologies has been highly secretive about its activities to date, it’s challenging to determine all of its activities with full clarity. However, there have already been noteworthy indications regarding its social and governance predilections.
For instance, until last month and for the past 17 years of its existence, its board of directors had only Peter Thiel – one of its controversial co-founders – and three men, apparently with no independents. The company, which is working with an IPO readiness consultant, has decided to add up to three independent directors to the board, of which only one is a woman – a 39-yr old staff writer from the Wall Street Journal. In view of California’s requirement that public companies based in the state have at least one woman on their board, it appears that its decision to diversify its board was compliance driven.
Another co-founder, Joe Lonsdale, had been sued for sexual assault, which was settled and dropped a few months later. However, Stanford University – where he was mentoring his accuser – did not drop all accusations of misconduct against Lonsdale, where he remains subject to a 10-year ban from mentoring and teaching. That ban was applied “because Mr. Lonsdale and Ms. Clougherty engaged in a relationship and did not disclose it as per Stanford’s Consensual Relationships policy,” Lapin told The Stanford Daily in 2015.
On the social front, Palantir has raised the ire of ethical investors over human rights and has sparked numerous protests. The Investor Alliance, representing 150 institutional investors with $4 trillion under management, has accused Palantir of “failing to fulfil its human rights responsibilities.” It’s secretive government and security services contracts have enabled detailed spying for the controversial work of U.S. Immigration and Customers Enforcement (ICE). In fact, the only early investment in Palantir was $2 million from the U.S. Central Intelligence Agency’s venture capital arm, In-Q-Tel.
The company, which derives about half of its revenue from government contracts, has also been involved in wide ranging work for the US government and police forces from verification for the Iran nuclear deal, to accepting a contract in 2013 to help the Northern California Regional Intelligence Centre build a contentious license plates database for California. In 2012 New Orleans Police Department partnered with Palantir to create a predictive policing program.
In June 2015, Buzzfeed reported the company was raising up to $500 million in new capital at a valuation of $20 billion, however more recently its shares have sold in the private secondary market at near half that valuation, between $8-12Bn. A confidential filing doesn’t always translate to an IPO, and Palantir could undertake a direct listing or even pursue a private sale, like the recent one for Postmates. Either way, ESG investors will need to ask some shrewd questions to understand the potential pitfalls of Palantir’s contracts, governance and fellow shareholders.