Battle for power at Uber as investor sues ex-CEO Travis Kalanick alleging fraud
Benchmark Capital accuses Travis Kalanick of fraud to ‘increase his power over Uber for his own selfish ends’ as former CEO calls the case ‘riddles with lies’
Travis Kalanick is being sued by one of Uber’s largest investors, Benchmark Capital, which accuses the former chief executive of engaging in fraud in order to “increase his power over Uber for his own selfish ends”.
The Benchmark complaint exposes an ugly battle for power at the top of the nearly $70bn startup, which has been buffeted from crisis to crisis all year and is still searching for a replacement for Kalanick.
The suit, filed on Thursday in Delaware Chancery court and first revealed by Axios, seeks to remove Kalanick from Uber’s board of directors and bar him from interfering with Uber’s business affairs. It demands redress for the alleged “fraud, breaches of fiduciary duty, and breaches of contractual obligations” perpetrated by Kalanick.
The former CEO has hit back at the lawsuit, saying through a spokesperson that the case against him was “completely without merit and riddled with lies and false allegations”.
Uber has never been uncontroversial, but the company was plunged into a huge crisis in February following the publication of a blogpost alleging widespread sexual harassment and gender discrimination. It precipitated two investigations into the company’s culture, the firing of 20 employees, an exodus of top executives and Kalanick’s eventual resignation in June.
Benchmark did not publicly criticize Kalanick’s leadership of the company during the tumultuous months before his resignation, but the lawsuit lays bare a litany of complaints about what the investment firm alleges was “his gross mismanagement and other misconduct at Uber”.
Kalanick failed to disclose vital information about the self-driving truck startup Otto before Uber acquired it for $680m in 2016, the complaint alleges. That acquisition has been tainted by a massive lawsuit brought by Google spinoff Waymo over allegations that former Google engineer and Otto founder Anthony Levandowski stole Google’s intellectual property and took it to Uber.
The lawsuit makes clear that Benchmark blames Kalanick personally for the mess, which poses a serious danger to Uber’s ability to develop its own autonomous vehicle technology.
The complaint also raises other scandals alleged to have involved Kalanick, including an executive’s mishandling of a rape victim’s medical files, a visit by executives to a South Korean escort bar, and Greyball, a program used by Uber to deceive local law enforcement agencies in areas where the ride-hail service was illegal.
The suit alleges that by concealing such actions and information from the board of directors, Kalanick was able to convince them to add three additional seats to the board in 2016. Benchmark claims that these board seats were created fraudulently, and the suit seeks to have them removed. Since Kalanick occupies one of these board seats, having vacated the seat reserved for the CEO upon his resignation, he too would be removed from the board.
“Kalanick’s improper role on the board threatens the sound management of Uber during this critical period,” the suit states. “Moreover, the value of Benchmark’s investment in Uber is significantly threatened by Kalanick’s continued presence on the board.”
A spokesperson for Kalanick called the suit “completely without merit and riddled with lies and false allegations”. The statement accused Benchmark of “acting in its own best interests contrary to the interests of Uber, its employees and its other shareholders”, and said that Kalanick “will continue to act in the interests of Uber and all of its stakeholders”.
Uber declined to comment on the lawsuit. The company has yet to name a new CEO since Kalanick’s resignation, amid reports of infighting by the members of the board of directors. The company has also failed to fill a number of other top positions, including hiring a chief operating officer.
Earlier on Thursday, Uber’s senior vice-president of global operations, Ryan Graves, resigned from his operating role. Graves was Uber’s first employee and holds a seat on the board of directors, which he will maintain.