The Uber bribery investigation is a case that could go on for more than a year, snowballing legal and compliance expenses it was reported today.
This is a highpoint in a drama story from Silicon Valley of the startup Uber that turned tragically wrong.
In the latest addition to the tales of Uber, this bribery case is centered around whether Uber managers violated a 1977 anti-bribery law, known as the Foreign Corrupt Practices Act (FCPA).
The law bars U.S. companies and some other entities from paying bribes to foreign government officials to obtain business.
Uber was reported to have been paying Indonesian authorities with suspicious activity in at least five other Asian countries: China, India, Indonesia, Malaysia and South Korea.
Bloomberg had originally reported that “Uber’s law firm is also investigating a corporate donation, announced in August 2016, of tens of thousands of dollars to the Malaysian Global Innovation and Creativity Centre, a government-backed entrepreneur hub. Around that time, a Malaysian pension fund, Kumpulan Wang Persaraan (Diperbadankan), invested $30 million in Uber, said people familiar with the deal. Less than a year later, the Malaysian government passed national ride-hailing laws that were favorable to Uber and its peers. Lawyers are trying to determine whether there was any form of quid pro quo.”
But the dodgy shit doesn’t end there.
There are investigations into how Eric Alexander (former Uber executive) came into the possession of a rape victims medical record.
The rape victim was driven to an isolated area and raped by an Uber driver.
Dodgy other practices such as the Hell program, Greyball (which helped drivers avoid authorities in places where Uber was not yet approved), and “God View” which tracked journalists are also under investigation.
Internally the company has been struggling with PR disasters, with female engineers reporting traumatising sexual harassment, racial rants going viral (when a uber driver asked for a pay increase), and trade secret lawsuits keeping the company in the headlines.
And while Uber is trying to clean up internally, the latest investigation holds more at stake.
A Bribery case is a criminal conviction which will result in individuals being held responsible and imprisoned.
But this is rare, instead what will most likely happen is U.S. authorities will ask for the appointment of a monitor – a person from outside the company, often a lawyer, to serve as a watchdog until they can persuade the government otherwise.
In the meantime compliance costs will be what the real kicker is to Uber.
Just as an example, Avon cosmetics (who were investigated last year for its China operations) had to pay $135million just to comply. That case took six years and doesn’t include lawyers costs or structural costs required to get the company in order. So if your Avon ladies were feeling pressure from the top, that’s why.
Uber’s case may not be the hope taxi companies were hoping for.
As the market turns it preference to Uber for safety (it has tracking), reliability and ease of use, should this case cripple the company, other providers such as Lyft will take its place.
Lyft (who is Uber’s number 1 competitor in the US) is funded by Alibaba, General Motors, Rent-A-Car, Prince al-Waleed bin Talal of Saudi Arabia and Alphabet…also known as Google.
Uber’s investors are some of the largest capital funds around and were the ones who sued the CEO asking him to step down when some of the behaviour started to come to light.
Meanwhile, Grab the popcorn folks, this Uber story of a silicon valley startup rise and fall is what movies are made of.