Uber said to face FBI probe as compliance chief exits

2017-09-11 10:46 - Christian Berthelsen and Eric Newcomer
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New York - Uber is under investigation by federal authorities in New York for its alleged use of a spyware program designed to undermine competition for its digital ride-hailing service, according to people familiar with the matter.

The executive charged with making sure Uber follows the law, global head of compliance Joseph Spiegler, resigned last week after a year and a half on the job, according to two people familiar with the matter.

While Spiegler reported to the company’s top lawyer, Uber is searching for a replacement who would report directly to new CEO Dara Khosrowshahi, one of the people said. The ride-hailing company faces three major US legal probes.

READ: Uber's new CEO faces daunting fix-it list as crises abound

Federal prosecutors and FBI agents in Manhattan have been investigating a program nicknamed “Hell” at Uber that allegedly allowed the company to spy on drivers from competing service Lyft, according to the people.

The program was said to identify drivers who worked for both companies and targeted them with cash incentives to shift their allegiance to Uber. The program was allegedly used from 2014 to 2016, the people said.

US authorities are already investigating the company on two other fronts: another program nicknamed “Greyball” that was allegedly used to deceive regulators about its operations; and possible violations of the Foreign Corrupt Practices Act, which bans payments of bribes to foreign officials.

The Greyball investigation is being overseen by federal prosecutors in San Francisco, while the foreign payment case is being handled out of Justice Department headquarters in Washington.

Matt Kallman, a spokesperson for San Francisco-based Uber, said the company is cooperating with the investigation, and the Hell program is no longer being used. Representatives for the FBI and acting US attorney Joon Kim in Manhattan declined to comment on the probe.

Legal scrutiny

Lyft drivers filed a class-action lawsuit against Uber over the Hell program in San Francisco federal court in April. A judge granted Uber’s request to dismiss the case last month, but allowed it to be revised and refiled. News of the New York investigation into Uber’s practices was reported earlier by The Wall Street Journal.

Closely held Uber has been beset by legal and regulatory scrutiny across a range of its practices, contributing to the pressure that ultimately resulted in the resignation of co-founder and former CEO Travis Kalanick in June.

READ: Uber CEO resigns from ride-sharing startup

Major early-stage investors in Uber rebelled against Kalanick’s leadership after a string of controversies, including its treatment of female employees and drivers.

Uber hired Khosrowshahi, who was CEO of travel website Expedia, to take over the helm of the ride-sharing service beginning this week.

READ: Uber’s new CEO projects unity with Kalanick: Fully charged

Khosrowshahi has said he plans to draft a new set of core values for the company and hopes to clean up its troubles to ready it for a public offering, possibly in 2019.

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