Does a company have to behave ethically to succeed? How about having an ethical culture in order to succeed? In the case of Uber, it may not be the case. Stunned by a series of corporate miss-steps, allegations of tolerated if not sanctioned workplace harassment, and one epic temper-tantrum by the chief executive, Uber may have now stepped over the legal line with the reports of its Greyball program, which the company has used for years. The program “was designed to prevent people from using the Uber app in violation of the terms of service, including law-enforcement sting operations and competitors attempting to disrupt Uber’s operations.”
Uber used the program in cities where it was not permitted to operate to forestall officials attempting to determine if Uber was violating any taxi terms of services regulations. The program is quite sophisticated, using various metrics to determine if regulators where engaging in sting operations. If they were determined to be indicia of such a sting operation, Uber simply failed to send drivers to pick up those pesky regulators. Best of all, it was reported the program had been approved by the company’s in-house legal team.
Uber defended the program, saying that it was designed to prevent drivers from being routed to particularly troublesome areas or customers (ie., profiling) to protect them from harm. However even if the program only profiled customers in the beginning it is easy to see how it could morph or be used for other nefarious purposed. Reminding The Man From FCPA of the JPMorgan FCPA enforcement action, where the illegal program (Sons and Daughters) actually began as an FCPA compliance tool, the Greyball program may have begun as a safety program but it certainly did not stop at legal and ethical maneuvering from moving into another area.
Given the raft of bad news to hit Uber recently, one might assume their stock price would take a hit. Oops! The Man From FCPA forgot that Uber is not a public company, so there has been no hit to its stock prices. If, however, the company does go public in 2017, it will be interesting to see who signs off on their SOX 404(b) attestation to the accuracy of the financial statements and adequacy of internal controls.