One of Uber’s earliest investors and largest shareholders, Benchmark Capital, is suing co-founder and ex-CEO Travis Kalanick under claims of fraud, breach of fiduciary duty and breach of contract. It’s a very alarming move, as it’s not everyday that a venture capital firm sues an executive of a company it once supported.
The case filing against Kalanick claims that the former CEO was responsible for “material misstatements”, and suppressed crucial information regarding company issues in order to not only retain, but gain more power on the board.
Specifically, the filings accuse, “Kalanick intentionally concealed and failed to disclose his gross mismanagement and other misconduct.” Aside other reasons, it highlights, “Kalanick’s personal involvement in…an Uber executive’s alleged theft of the medical records of a woman who was raped by her Uber driver in India.”
All of these accusations center around Kalanick’s decision, made in June of 2016, to increase board seats by 3, from 8 to 11. Before stepping down as CEO earlier this year, Kalanick named himself to one of those seats.
However, Benchmark notes that the expansion would never have been allowed to happen had the company known of the various conflicts, including sexual harassment claims that circulated the company, and disputes over the alleged compromisation of intel on self driving technology from Alphabet’s Waymo.
The filing suggests that Benchmark wants to revert the number of board seats from 11 back to 8, effectively stripping Kalanick of his board seat and shunning him out of Uber management for good. Additionally, the venture firm is looking for “an award of related damages caused by Kalanick’s fraud.”
Ryan Graves, the original CEO of Uber announced this morning that he was stepping down as vice president of global operations, but will retain his position on the board of directors for Uber.
Holding 13% of company stock and 20% of voting rights to Uber, Benchmark has just a slightly larger stake than Kalanick who holds 10% and 16% respectively. Valued at around $70 billion during its last round of funding, the ride-sharing industry shaker is now considering share issuances that will significantly cut its valuation to just around $40 to $45 billion.
In an emailed statement to CNBC, a spokesperson for Kalanick commented:
“The lawsuit is completely without merit and riddled with lies and false allegations. This is continued evidence of Benchmark acting in its own best interests contrary to the interests of Uber, its employees and its other shareholders. Benchmark’s lawsuit is a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder and to silence his voice regarding the management of the company he helped create. Travis will continue to act in the interests of Uber and all of its stakeholders and is confident that these entirely baseless claims will be rejected.”
Featured mage: twitter
