Musk's 'drug use', money ties with directors, board inaction: What WSJ’s damning report says

Musk oversees six companies: Tesla, SpaceX, X, The Boring Co., Neuralink, and xA (AFP/File image)

The “use of illegal drugs” by billionaire Elon Musk was known to some serving and former directors of at least two of his firms — Tesla and SpaceX, the Wall Street Journal reported, citing people aware of the matter.

There is a sense of concern among the board members of Musk’s entities, but they have failed to take public action or initiate an investigation on the issue, the report published on February 3 said.

The WSJ article comes a month after the newspaper, in another startling report, cited unidentified people to claim that Musk used several drugs, including those banned in the US.

Here’s a breakdown of what the latest report says:

Money ties with shareholders

WSJ, while stating that the boards of Tesla and SpaceX failed to take any public action despite some of its members being aware of Musk’s alleged drug use, pointed towards the money ties between him and a number of directors.

Among the current and former directors on the boards of Tesla, Musk has invested in the entities linked to venture capitalists Antonio Gracias, Ira Ehrenpreis, tech magnet Larry Ellison and former media executive James Murdoch. They, in turn, have invested in companies linked to Musk and his brother Kimbal Musk, the report pointed out.

Ellison, while being a director, was also the owner of a significantly sizeable 1.5 percent stake in Tesla as of 2022.

Apart from the financial ties, Musk is also credited for giving career support to some of them. The most prominent example is Steve Jurvetson, who stepped down from his firm DFJ Venture Capital in 2017 after being accused of sexual harassment. Despite the allegations gaining media glare, Tesla retained him as an independent director till he resigned on his own accord in 2020.

Juvertson shared “deep financial ties” with Musk and attended parties with him, where ecstasy and LSD were used, the report said, citing sources. The Tesla boss, in private conversations, pushed directors to allow Jurvetson to take an unusual leave of absence after the latter was engulfed in controversy.

The report also highlighted that the remuneration which Tesla provides to its shareholders is steeply higher than the national average. According to the National Association of Corporate Directors, the average compensation drawn by board members among America’s 200 largest companies stood at $329,351 in 2023.

In comparison, Tesla’s current board members have drawn an average annual compensation of about $475,000 since 2015 and hold stock valued at about $8 million, according to the report.

Notably, Tesla is listed on Nasdaq, where the rules state that all publicly traded companies must have a majority independent board. The company’s board, however, drew questions last year when Amalgamated Bank signed a shareholder letter in April urging Tesla board members to increase their “meagre oversight” of Musk.

Amalgamated Bank managed an estimated $180 million of investments in Tesla as of September 2023.

Musk’s alleged drug use

The WSJ, in its January report, cited sources to claim that Musk has been using drugs such as cocaine, ecstasy, LSD and magic mushrooms.

Musk has been using ketamine, a drug which he obtained by prescription, for recreational purposes during his visit to Austin Proper Hotel in recent years, the newspaper said. He was accompanied on those visits to the Austin, Texas-based 5-star hotel with his friend and Tesla board member Joe Gebbia.

Gracias and Jurvetson, present directors on the boards of Tesla and SpaceX, respectively, also consumed drugs with him, the publication learnt from people with direct knowledge of the matter.

Musk, along with his brother Kimbal and people close to him, attends parties at Hotel El Ganzo, located in Mexico’s San José del Cabo, the people said. The boutique hotel is known for its drug-fueled events, the report said.

The business magnate also attended a party in the Hollywood Hills in late 2022, where he consumed a liquid form of ecstasy from a water bottle, one of the persons who was present there told WSJ. Before he took the drug, Musk’s security team asked people to leave the floor for his privacy, the report claimed.

Concerns for Musk's companies

Musk’s alleged drug use poses a risk to the six companies he oversees, in which an estimated $800 billion is held by investors. Some of the board members are concerned about the potential harm it could cause, the WSJ report said.

The alleged use of illegal narcotics could hurt SpaceX’s federal contracts and lead to the revocation of Musk’s security clearances, apart from violating the strict anti-drug policies enacted by his own companies.

Some of Musk’s friends and those close to him have asked him to undergo rehab, the people privy to the matter told the publication, adding that they fear that his condition may get worse.

Musk was advised in the winter of 2022 by Ellison, his friend and former Tesla director, to spend time at his Hawaiian island to dry out from the drugs, the report said, citing persons aware of the proposal.

Despite the worries, Tesla’s directors did not lodge their concerns in the official board meetings.

Musk’s response so far

The Tesla and SpaceX chief was yet to respond to the latest WSJ report. While reacting to the publication’s article released last month, he said he has been undergoing drug tests since 2018. “Not even trace quantities were found of any drugs or alcohol. @WSJ is not fit to line a parrot cage for bird,” he had posted on social media platform X, which he bought in October 2022.

“If drugs actually helped improve my net productivity over time, I would definitely take them!” Musk had added.

Musk’s lawyer, Alex Spiro, has also not responded to the WSJ’s latest report. However, while reacting to the article related to Musk’s alleged drug use published in January, Spiro called it baseless. Musk is regularly tested at SpaceX and has never failed a test, the lawyer said.