MORE TROUBLE FOR BOEING: Boeing Cancels Project – By Todd Horwitz, Bubba Trading

 

Boeing said Thursday it was canceling a controversial satellite order that was financed by a Chinese government-owned firm, citing default for nonpayment. Boeing’s decision follows a Wall Street Journal Investigation this week that highlighted China’s opaque role in funneling around $200 million to the project.

Under U.S. export-control laws, Boeing isn’t allowed to sell satellites to China directly. The company faced criticism from national security officials that it attempted to sidestep U.S. regulations on sensitive technology, which the U.S. military relies on.

A person familiar with Boeing’s thinking said canceling the order was a business decision. The person said the company would likely attempt to resell the satellite, which had been nearing completion at a Boeing facility in Los Angeles. On paper, a Los Angeles startup called Global IP was Boeing’s customer in the project. The company was behind on payments for the satellite and needed to raise over $200 million more to complete it. 

Global IP didn’t immediately respond to request for comment. Its CEO Bahram Pourmand previously pledged to push ahead despite the controversy over China’s involvement. The satellite was intended to provide better web access to Africa. A concern among officials was that China might repurpose the commercial technology for military use.

Details of the satellite deal began to emerge after tensions boiled over last year between founders of the startup and a state-owned Chinese company that had already provided about $200 million in financing through an intermediary. 

Global IP’s founders, Emil Youssef zadeh and Umar Javed, allege in a lawsuit in federal court in California that the Los Angeles startup was secretly controlled by China after it accepted financing from a unit of state-owned China Orient Asset Management Co. in a complex deal that involved offshore firms in the British Virgin Islands. Global IP has denied it was controlled by China.

By Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.