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DoJ in criminal probe over Uber’s dealings with Malaysian govt

 | September 20, 2017

Uber's lawyers are currently investigating donation of tens of thousands of dollars to Putrajaya's MaGIC programme.

UberSAN FRANCISCO: Uber Technologies Inc., facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified US officials about payments made by staff in Indonesia, people with knowledge of the matter said.

As the Department of Justice looks into a possible criminal case, Uber is working with law firm O’Melveny & Myers LLP to examine records of foreign payments and interview employees, raising questions about why some potentially problematic business dealings weren’t disclosed sooner, said the people, who asked not to be identified because the details are private.

Attorneys are focused on suspicious activity in at least five Asian countries: China, India, Indonesia, Malaysia and South Korea.

For instance, Uber’s law firm is reviewing a web of financial arrangements tied to the Malaysian government that may have influenced lawmakers there, the people said.

Uber said it’s cooperating with investigators but declined to comment further. Wyn Hornbuckle, a Justice Department spokesman, declined to comment.

Late last year, Uber had a run-in with Indonesia police over the location of an office in Jakarta providing support to local drivers, people with knowledge of the events said.

Police officers said the space was outside city zoning for businesses, so an employee decided to dole out multiple, small payments to police in order to continue operating there, the people said. The transactions showed up on the employee’s expense reports, described as payments to local authorities.

Uber fired the employee, the people said. Alan Jiang, the company’s head of Indonesia business who approved the expense report, was placed on a leave of absence and has since left the company. Jiang didn’t respond to requests for comment.

At least one senior member of the legal team at Uber initially decided not to report the incident to US officials when he learned of it late last year, the people said. After the Justice Department approached Uber about possible violations of the Foreign Corrupt Practices Act, Uber informed officials about what happened in Indonesia. The Justice Department can be more lenient when a company voluntarily discloses information.

Uber’s law firm is also investigating a corporate donation, announced in August 2016, of tens of thousands of dollars to the Malaysian Global Initiative and Creativity Centre (MaGIC), a government-backed entrepreneur hub.

Around that time, Malaysian pension fund, Kumpulan Wang Persaraan (KWAP), invested US$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 favourable to Uber and its peers.

Lawyers are trying to determine whether there was any form of quid pro quo.

Emil Michael and Eric Alexander, two former business executives at Uber, played key roles in negotiating those deals, the people said.

Uber’s law firm is also asking questions about how Alexander came into possession of an India rape victim’s medical records, a document he regularly carried around with him for several months in 2015.

Michael and former Chief Executive Officer Travis Kalanick were aware that Alexander had the medical report, and they discussed it with colleagues. Alexander and Kalanick declined to comment through spokespeople, and Michael didn’t immediately respond to requests for comment.

Dealings in China and South Korea are also under review, though the details are unclear. The bribery inquiry is one of at least three federal probes the San Francisco-based company faces — the other two involves software developed by Uber to gather data on competitors and deceive law enforcement officials conducting stings on Uber drivers.

Before the probe into foreign payments, O’Melveny & Myers advised self-driving car start up Otto on its sale to Uber. Alphabet Inc. is now suing Uber over trade secret claims related to that deal. In June, Uber asked O’Melveny & Myers to focus on the India probe, and the scope expanded.

It’s common in corporate fraud cases for companies to conduct an internal investigation into allegations of misconduct and report those findings to the Justice Department. Such internal probes often help the government decide the size and scope of an investigation.

The mounting legal troubles have played a role in the departures of several top executives, including Kalanick.

He was pressured to step down by investors, who said his leadership put the company at legal risk. The head of compliance left this month, and Salle Yoo, the chief legal officer, also said she plans to depart after helping new CEO Dara Khosrowshahi find her successor. On Tuesday, Michael Brown, head of operations in Asia, said he plans to leave.


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