We are not big fans of Uber. We love the drivers, just not the leadership of the company. Even though Travis Kalanick recently resigned, problems at the ride share giant continue. The latest is a Justice Department investigation involving bribery of public officials!
Last year we proudly filed several lawsuits on behalf of Uber drivers. These folks have no say in the direction of the company or the bro / frat boy mentality of upper management. They simply want to make a living wage. Unfortunately, all those cases went up in flames. Uber contractually forbid its drivers to sue! And just to be on the safe side, convinced the state legislatures in many states to double lock the doors to the court house.
Justice Department Investigates Uber for Foreign Corruption
Soon after launching operations in the United States, Uber expanded operations to 70 countries. The Justice Department is investigating whether that rapid expansion was funded through the bribery of foreign public officials. Under the Foreign Corrupt Practices Act (FCPA) it is illegal to bribe or offer to bribe a foreign government official. Although the law is criminal and can include prison time, whistleblowers who report these violations can obtain cash awards. More on the awards below.
Uber has found itself in trouble in many countries, although to date there have been no allegations of bribery.
Last month the company found itself in hot water after the company was found to have purchased defective Hondas that were prone to catch fire. The company knew the cars were defective at the time of purchase and subject to recall. Only after a car caught fire did the company fix the cars.
Uber was also in trouble with Philippine regulators last month. When the Philippine Land Transportation Franchising and Regulatory Board suspended the company for one month, company officials at first defied the suspension and continued operating according to the BBC.
In recent months we have also followed disputes between Uber and France, the UK, Macau, South Korea, Japan and India. The better question may be to ask who hasn’t Uber pissed off?
All the disputes we have followed to date are regulatory. The FCPA investigation ups the ante. FCPA means the investigation of Uber is criminal. The Justice Department doesn’t confirm or deny criminal investigations but an Uber spokesperson told the Wall Street Journal spokesperson that the company was cooperating in the investigation.
Uber and Campaign Contributions in the US
Uber has lobbyists all over the United States. Donating to campaigns and political parties isn’t illegal. But bribery of a government official in the hopes of avoiding a sanction or in seeking a favorable ruling is illegal.
We watched last year as Uber (and Lyft) poured millions of dollars into an Austin, Texas municipal election. The two companies reportedly spent $2.2 million simply to convince city voters to defeat a measure that would require drivers to undergo fingerprint background checks. The drivers we spoke with welcomed the measure but worried that Uber would pass on the costs to them! (The PAC that was defending the ballot measure, “Our City, Our Safety, Our Choice” was only able to raise $12,500.)
Uber tends to act like a bully and its arrogance was on full display in Austin. The company told city officials it would pull out of Austin if the city made the company fingerprint drivers. One Uber financed advertisement featured a blind woman telling voters, “Please don’t take Uber away.”
In the states where we brought class action cases on behalf of drivers, the company simply lobbied the state legislatures and convinced them to legislatively declare that drivers were not employees and thus not entitled to many legal protections.
In other words, Uber will do almost anything to get its way. If the company has bribed government officials we won’t be shocked.
Uber’s Problems Start at the Top
We believe that 99% of Uber’s drivers and inside workers are decent, hardworking people. The cancer at Uber started with Kalanick and spread through upper management. As we write this post, the Justice Department is also investigating Uber for use of its “Greyball” software used to evade law enforcement and regulators. The software was reportedly used in Portland, Oregon at a time when the Uber was not yet approved to offer services there.
Reuters reported that the company received a grand jury subpoena in May related to Greyball. The company said its use of the software used “exceedingly sparingly.”
In 2016, the company lost it right to test driverless cars on California roadways. Why? Because it refused to pay $150 for a permit from the California Department of Motor Vehicles. What should have been a positive press event for the company became a disaster after the DMV shut down the test of 15 driverless cars in San Francisco. Verge reports that the company knew for months it needed a permit but refused to pay.
According to Verge, “It turns out that all this drama was preordained months in advance. According to a lengthy email exchange between Uber and the DMV obtained by The Verge from a public records request, Uber was repeatedly urged to sign up for the state’s autonomous testing permit, with the DMV even offering to expedite the process to make it as quick and seamless as possible. Had it done so, Uber could have saved itself a lot of embarrassment and could be offering trips in self-driving cars in San Francisco right now.”
The stories above are all recent but perhaps Kalanick is best known for the 2013 memo he sent to employees traveling to Miami for a big company meeting. His memo began, URGENT, URGENT – READ THIS NOW OR ELSE!!!!! You better read this or I’ll kick your ass.” It quickly went downhill from there and described the rules of engagement should company employees want to have sex with one another.
The memo also said such things as “Have a great fucking time. This is a celebration! We’ve all earned it” and “Miami’s transportation sucks ass.”
One female employee reports that on her first day on the job, her manager propositioned her for sex. The company’s HR manager agreed that she was being sexually harassed but wouldn’t take action because the man was a high performer. When she confronted her boss directly, that didn’t fix the situation either. “I told him that was illegal, and he replied that he had been a manager for a long time, he knew what was illegal, and threatening to fire me for reporting things to HR was not illegal.”
Earlier this year a video surfaced of Kalanick berating one of his own drivers. That video appears at the end of this post.
When the CEO treats the company like a boy’s club, no one should be surprised when sexual harassment allegations begin to bubble to the surface. Nor should anyone be surprised when allegations of foreign bribery surface. The same arrogance that leads the company to snub the California Department of Motor Vehicles is what can easily lead to a violation of the FCPA.
What is Really Going on at Uber
It’s anybody’s guess at this point what will come of the latest probe of Uber technologies involving foreign corruption and bribery. We strongly suspect the following, however:
- The Justice Department is not on a fishing expedition. Someone, somewhere has approached the government with solid evidence.
- With so many problems, Uber can’t lobby their way out of this one. The company has received too much bad ink and too many people are demanding change.
- With Uber in 70 countries and so many unhappy workers, we believe that the government’s investigation has only scratched the surface. Like an iceberg, there is a lot we haven’t seen yet. And that means plenty of whistleblower award opportunities for those past and present workers willing to step up.
Uber Whistleblowers and the FCPA – HUGE Awards Possible
Uber’s constant misbehavior hasn’t earned the company any friends. If the allegations are true, Uncle Sam should come down hard on Uber. Proving those allegations is difficult, however. One needs proof and by the nature of the beast – foreign corruption – that proof is probably outside the United States or in the hands of a select few corporate insiders.
Qualifying for an award under the SEC’s Whistleblower Program means having inside or “original source” information. Generally, only the first to file gets an award so there is a big incentive to file quickly.
Many of the whistleblowers we represent fear retaliation. Given all the bad press surrounding Uber these days, we hope they are smarter than to retaliate. If they do, however, the SEC has powerful anti-retaliation provisions to protect workers. And we can help should retaliation occur.
Some folks fear severance agreement or golden parachute provisions that say an employee gives up rights to lucrative bonuses or may even have to pay back money if they report wrongdoing. Again, SEC rules prohibit these clauses. If you have a concern, call us and we will review your agreement.
Obtaining an award means filing a claim. We handle all that and more on a contingent fee basis. If you don’t collect, we don’t get paid.
The best weapon against corporate greed and corruption are a company’s employees. The chance of the SEC or Justice Department uncovering any wrongdoing without cooperation is poor. If you know of foreign bribery, step forward and report it. You may be entitled to a huge award.
For more information, contact attorney Brian Mahany at or by phone at (414) 704-6731 (direct). You can also visit our FCPA foreign bribery page. All inquiries are protected by the attorney – client privilege and kept confidential.
Argument begins around 3 minutes 45 seconds.