A private equity firm's secret strategy to crush German unions on behalf of sovereign wealth funds
Leaked documents from the Munich-based General Capital Group apparently detail the firm's attempts to crush German unions on behalf of Gulf and Pacific sovereign wealth funds.
When the Munich-based electric aircraft startup Lilium signed a prominent five-year partnership with the American data analytics giant Palantir in 2021, its future seemed bright. But journalists and investors grew increasingly skeptical of the realities of the company’s promised capabilities for fully-electric vertical takeoff and landing, resulting in the company releasing a desperate announcement one day before Christmas last year.
“Mobile Uplift Corporation GmbH intends to acquire the operating assets of the Subsidiaries Lilium GmbH and Lilium eAircraft GmbH,” read the Christmas eve announcement. The acquisition failed less than two months later, allegedly for “technical reasons,” resulting in Lilium filing for insolvency on February 21. Reporters had quickly uncovered from German public records that Mobile Uplift Corporation was led by the prominent German investor Philipp A. Schoeller, the managing director of the secretive, Munich-based private equity firm General Capital Group (GenCap), but inquiry largely ended after Lilium’s dissolution.
Originally formed on September 10, 2024 by account executives Katja Gogalla and Sandra Luther from the “shelf company”-provider Blitzstart.com, management of Blitz 24-271 GmbH was passed over to Mr. Schoeller on December 3, and the company was renamed to MUC Mobile Uplift Corporation GmbH. Just over two weeks after the Christmas eve public announcement from Lilium, control of MUC was against passed to German crisis response manager Severin Tatarczyk, with a further name change to Lilium Aerospace GmbH shortly following.
An archive of recently leaked emails from former Israeli prime minister Ehud Barak purports to include his voluminous — but previously unreported — correspondence with Mr. Schoeller and GenCap regarding the firm’s central strategy of serving as a “German face” for foreign sovereign wealth funds, such as the Qatari and Kuwaiti investment authorities, the Saudi Central Bank, Russia’s Sberbank, the China Investment Corporation, and Singapore’s Temasek. One detailed April 2013 presentation in the archive contains a slide dedicated to suppressing German worker power, describing how GenCap, since it founding in 2005, leverages its political connections across the senior leadership of German blue chip companies to unify shareholders while simultaneously converting unions “into a structural minority […] pacified by constant relationship management.”
“The co-determination rights that are granted to employees in Germany’s dual board structure makes it more difficult for the management to implement unpopular measures (e.g. productivity),” read the title of another slide, in reference to a legal framework granting German workers voting power in corporate boards. GenCap’s solution to German worker resistance to factory shutdowns and layoffs, according to the leaked documents, was to “Gain supervisory board seats, Unify capital side, Secure chairman’s casting vote, [and] Manage union relationships.”
The archive is part of a trio of leaks from the hacktivist group ‘Handala’, which is conjectured to be connected to the Iranian government. The emails are nevertheless believed to be authentic and are the subject of ongoing international reporting, largely as a result of the curation of the archives by the American transparency nonprofit Distributed Denial of Secrets.
The apparent introduction between Ehud Barak and GenCap managing director Philipp Schoeller came on January 28, 2013, while Barak was near the end of his term as Israel’s minister of defense, in the immediate aftermath of their meeting at the World Economic Forum’s prestigious annual forum in Davos, Switzerland. “Lets [sic] focus on your amazing top contacts Nazarbayev or other heads of state, some top jewish entrepreneurs/families, Soverein [sic] Wealth Funds, etc,” read the introductory email from Schoeller to Barak, referencing Kazakhstan’s then-president Nursultan Nazarbayev and attaching a proposed one-year partnership agreement.
The U.S. military subsequently published a photo of U.S. Secretary of Defense Chuck Hagel escorting Minister Barak into the Pentagon on March 5, 2013, 36 days after the introduction between Barak and Schoeller.
The emails further claim to document a pitch from Schoeller in the intermediary period regarding how GenCap / GCG could provide “technological progress for Russia,” including through “joint ventures between GCG target companies and Russian corporations." Dated February 6, 2013, the email’s subject line was “Pls call” and its attachments included a one-page overview of GenCap’s “exclusive” partnership with Russia and an overview of the firm’s previous flagship investment strategies. Other documents from GenCap named the Essen-based energy company RWE — which has received substantial investments from the Qatar Investment Authority — as an interest of Russia’s state-owned Sberbank.
Mr. Barak’s partnership with GenCap appears to have been cemented by April 22, 2013, with Mr. Schoeller purportedly emailing him that day with the contents of his upcoming business cards, which included a custom GenCap email address said to redirect to an account run by Barak’s wife, Nili.
Other emails in the archive purport to document Barak’s simultaneous direct negotiations with Boris Collardi, who was then serving as CEO of the secretive Swiss banking firm Julius Baer. Unlike his work with GenCap, reporters quickly uncovered Barak’s advisory role with Julius Baer. A partnership agreement in the archive which was putatively sent by Barak to Collardi on May 17, 2013 requests a yearly payment of “CHF 600,000 for the first year” — just under $650,000 at the time — beginning on May 23, 2013.
As first reported by the French news outlet Intelligence Online, the archive also purports to document Barak helping to introduce Hungarian Prime Minister Viktor Orbán to the Russian billionaire Viktor Vekselberg in August 2014. Mr. Vekselberg’s Renova Group was also an investor, through Columbus Nova Technology Partners, in the ill-fated Israeli data analytics firm Fifth Dimension, as first reported by Reason. Fifth Dimension was chaired from 2015 to 2018 by former Israeli defense minister Benjamin Gantz, whose emails were also leaked by Handala, and was the sister company to the still-active deep learning-focused cybersecurity company Deep Instinct.
A key positive benefit of GenCap to sovereign wealth funds was said to be “avoidance of political and public discussions” of their investments, with GenCap serving as a “firewall” against the “German public / politics.” The private equity firm further advertised former German central bank board member and Social Democratic Party (SPD) politician Dr. Edgar Meister as a “top senior advisor,” according to the leaked archive.
The GenCap presentation apparently shared in relation to a potential partnership with Russia provided detailed breakdowns of the private equity firm’s past influence over the shareholders of the iconic German automobile manufacturer Volkswagen — during a takeover bid by Porsche — and the semiconductor manufacturer and Siemens spin-out Infineon. The presentation emphasized that GenCap’s initial strategy with Volkswagen included “factory shut-downs, headcount reduction, shift to locw [sic] cost countries, [and] a spin-off of components.” Such unpopular actions were pitched in a subsequent presentation as being enabled “by a strong capital side,” allowing CEOs to “have the freedom to use innovative ways to unlock value,” and Qatar Holding was highlighted as a successful investor in Volkswagen.
Following a business meeting over breakfast on June 4, 2013, Mr. Schoeller likewise emailed a large team of executives from Singapore’s state-owned investment firm Temasek, promising his firm’s ability to provide “control over a GCG DAX target via leverage and like-minded shareholder diplomacy with only 1% investment of its market cap,” according to the archive. GenCap’s putative focus on serving as a secretive vehicle for sovereign wealth funds to influence companies from Germany’s index of 40 dominant companies — known as the DAX — would be one of many. An April 2013 presentation went as far as listing GenCap’s purported “active longstanding” contacts across 30 DAX companies, describing itself as “The local key to Germany.”
The leaked documents repeatedly highlight mid-2007 coverage in the Financial Times of GenCap’s attempts the previous year to purchase a portion of a 30% stake in the partially state-owned German telecommunications giant Deutsche Telekom. “Last week it emerged that Berlin could create a German equivalent of the US Committee on Foreign Investment, an inter-agency panel that can advise the US president to block foreign direct investments,” read a highlighted passage. “The power of so-called sovereign-wealth funds has spurred Berlin to consider extending rules barring foreign investors from buying defence companies to other sectors such as telecoms and banking,” the article continued.
The Los Angeles law firm Gibson Dunn argued in a 2023 presentation that Germany’s foreign direct investment rules were “less clear than in the US,” but that scrutiny had begun to increase over the preceding years, especially in regards to China and the vaccine industry.
“Since its foundation in 2005, Munich-based GCG gained prominence in particular in the battle for control of Volkswagen AG and the informed withdrawal from an acquisition of a 30% stake in Deutsche Telekom,” opened a one-page confidential memo from GenCap apparently shared with Barak in 2013, which further boasted of “on average 2-5%” stakes in “BASF, Siemens, [and] ThyssenKrupp.”
“Not one single transaction ever lost money,” claimed the memo.
General Capital Group and Ehud Barak did not respond to requests for comment.