The Uber board selected Dara Khosrowshahi, CEO of Expedia, as the company’s next chief executive on Tuesday. Hours after Khosrowshahi accepted the top spot and made his first public comments on the board’s decision, the ride-hailing business also confirmed that they were cooperating with a preliminary investigation led by the U.S. Department of Justice into the company’s possible violations of international bribery laws. Suffice to say that Khosrowshahi has his work cut out for him to clean up a corrupt corporate culture that has led to countless examples of wrongdoing and mistakes that have put the company’s future in jeopardy.
The board chose an outsider to try and right the ship, and the CEO of Expedia is a strong pick for the top job. He built Expedia into the largest online travel site and witnessed a six-fold increase in stock price since he became CEO in 2005. More importantly, he’s known for building strong company loyalty and running a diverse and disciplined team. That’s what Uber needs to recover from a series of crises in leadership and corporate culture, including allegations of sexual harassment, theft of intellectual property, multiple lawsuits, and reports that they tracked user data after people deleted the app on their phones. After several investigations by outside law firms, over twenty employees were fired for sexual harassment, inappropriate conduct, and retaliation. The board ousted founder and former CEO Travis Kalanick in June and also faces a dearth of senior executives after losing their chief financial officer, general counsel, and engineering lead. While the board has finally made the right move (after far too long), we believe that Khosrowshahi will need to clean house if he wants to restore public confidence in a company that wants to take over the transportation industry.
Once he’s in the head office, Khosrowshahi will be responsible for the company’s response to these crises. Unfortunately for him, he can add one more to his list: possible violations of the Foreign Corrupt Practices Act. The company has confirmed that they are facing a preliminary investigation by the U.S. Department of Justice. While details are scarce, the law prohibits the bribery of foreign officials. To be clear, we don’t know the source of the investigation or its merits. The ride-hailing business has already been accused of unscrupulous business dealings in India and China as it tries to break into tough foreign markets. They even hired a law firm to investigate how the company’s president of business in Asia Pacific, Eric Alexander, obtained the medical records of an Indian woman who was sexually assaulted by an Uber driver in 2014. Current and former employees allege that the company used bribes to illegally obtain the records in a move that we suspect was ultimately intended to discredit the victim. Uber is riddled with examples of mistakes, wrongdoing, and lack of judgment that make it all-too-easy to believe that they bribed foreign officials.
The company is cooperating with the investigation, and we will wait and see what their new CEO has to say about the matter. Khosrowshahi reported that he is nervous and excited to take the top job and knows that he will need to get his hands dirty to clean up the beleaguered company.