Uber said to review Asia dealings amid US criminal probe

SAN FRANCISCO — Uber Technologies, facing a federal probe into whether it broke laws against overseas bribery, has embarked on a review of its Asia operations and notified US officials about payments made by staff in Indonesia, people with knowledge of the matter said.

As the US Justice Department looks into a possible criminal case, Uber is working with law firm O’Melveny & Myers to examine records of foreign payments and interview employees, raising questions about why some potentially problematic business dealings weren’t disclosed sooner, said the people, who asked not to be identified because the details are private.

Attorneys are focused on suspicious activity in at least five Asian countries: China, India, Indonesia, Malaysia and South Korea. For instance, Uber’s law firm is reviewing a web of financial arrangements tied to the Malaysian government that may have influenced lawmakers there, the people said.

Uber’s operations in Singapore are not believed to be under scrutiny, meaning talks between Singapore’s largest taxi operator ComfortDelGro and Uber over a potential partnership has not been affected.

Last month, ComfortDelGro announced exclusive talks with Uber, which include making its fleet available on Uber’s app.

The potential tie-up could include joining hands on fleet management and booking software solutions, although ComfortDelGro said there was “no certainty or assurance” the talks would result in an agreement or an alliance materialising.

Singapore University of Social Sciences (SUSS) urban transport expert Park Byung Joon believes the discussions between the two firms will not be affected by the news of the US federal probe, unless irregularities are found in Uber’s Singapore operations.

Agreeing, SUSS transport economist Walter Theseira said: “As far as we can tell, Uber’s dealings with (Singapore’s) regulatory agencies are quite above-board. I don’t think anybody has ever heard anything about Uber, for example, engaging in any questionable transactions with government agencies (here).”

Singapore also has a low tolerance for corruption, and Uber “will not necessarily take the same risks here that they have in … other markets in the region”, Dr Theseira noted.

For ComfortDelGro, though, it has “no realistic alternative” but to explore a tie-up with Uber, he said.

“Its position is becoming untenable,” Dr Theseira added, noting that ComfortDelGro’s five rival taxi operators have inked partnerships with Uber’s rival Grab, which has taken the rest of the market.   

Uber said it is cooperating with US investigators on the federal probe but declined to comment further. Mr Wyn Hornbuckle, a Justice Department spokesman, declined to comment.

Late last year, Uber had a run-in with Indonesia police over the location of an office in Jakarta providing support to local drivers, people with knowledge of the events said. Police officers said the space was outside city zoning for businesses, so an employee decided to dole out multiple, small payments to police in order to continue operating there, the people said.

The transactions showed up on the employee’s expense reports, described as payments to local authorities.

Uber fired the employee, the people said. Mr Alan Jiang, the company’s head of Indonesia business who approved the expense report, was placed on a leave of absence and has since left the company. Mr Jiang didn’t respond to requests for comment.

At least one senior member of the legal team at Uber initially decided not to report the incident to US officials when he learned of it late last year, the people said. After the Justice Department approached Uber about possible violations of the Foreign Corrupt Practices Act, Uber informed officials about what happened in Indonesia.

The Justice Department can be more lenient when a company voluntarily discloses information.

Uber’s law firm is also investigating a corporate donation, announced in August 2016, of tens of thousands of dollars to the Malaysian Global Initiative and Creativity Centre, a government-backed entrepreneur hub.

Around that time, a Malaysian pension fund, Kumpulan Wang Persaraan, invested US$30 million (S$40.35 million) in Uber, said people familiar with the deal. Less than a year later, the Malaysian government passed national ride-hailing laws that were favourable to Uber and its peers. Lawyers are trying to determine whether there was any form of quid pro quo.

Mr Emil Michael and Mr Eric Alexander, two former business executives at Uber, played key roles in negotiating those deals, the people said.

Uber’s law firm is also asking questions about how Mr Alexander came into possession of an India rape victim’s medical records, a document he regularly carried around with him for several months in 2015.

Mr Michael and former Chief Executive Officer Travis Kalanick were aware that Mr Alexander had the medical report, and they discussed it with colleagues. Mr Alexander and Mr Kalanick declined to comment through spokespeople, and Mr Michael did not immediately respond to requests for comment.

Dealings in China and South Korea are also under review, though the details are unclear. The bribery inquiry is one of at least three federal probes the San Francisco-based company faces — the other two involve software developed by Uber to gather data on competitors and deceive law enforcement officials conducting stings on Uber drivers.

Before the probe into foreign payments, O’Melveny & Myers advised self-driving car startup Otto on its sale to Uber. Alphabet is now suing Uber over trade secret claims related to that deal. In June, Uber asked O’Melveny & Myers to focus on the India probe, and the scope expanded.

It is common in corporate fraud cases for companies to conduct an internal investigation into allegations of misconduct and report those findings to the Justice Department. Such internal probes often help the government decide the size and scope of an investigation.

The mounting legal troubles have played a role in the departures of several top executives, including Mr Kalanick. He was pressured to step down by investors, who said his leadership put the company at legal risk.

The head of compliance left this month, and Ms Salle Yoo, the chief legal officer, also said she plans to depart after helping new CEO Dara Khosrowshahi find her successor. On Tuesday, Mr Michael Brown, head of operations in Asia, said he plans to leave. BLOOMBERG, with additional reporting by KENNETH CHENG