Uber reviews Asia dealings amid US criminal probe
Uber Technologies, Inc., 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 Justice Department looks into a possible criminal case, Uber is working with law firm O’Melveny & Myers LLP 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 said it’s cooperating with investigators but declined to comment further. Wyn Hornbuckle, a Justice Department spokesman, declined to comment. traffic surges, the country needs more wide-body aircraft, he said, pitching for the A380 that hasn’t found much demand beyond the five flying in China.
Made in China Besides the political decision to woo China, where policy makers want companies to manufacture locally under a “Made in China 2025” blueprint, the two aerospace giants are also moving delivery closer to customers in Asia to help ease the strain on the planemakers’ existing facilities. The first A330 off the new line will go to Tianjin Airlines. The facility aims to roll out two planes a month in a year.
Airbus is also building a helicopter plant in the coastal city of Qingdao while Boeing has started construction of a finishing center for its 737 narrowbody jets on Zhoushan island south of Shanghai. Besides these facilities, the two are also in joint ventures with units of state-owned Aviation Industry Corp. of China, or AVIC, to supply aircraft parts.
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. 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. 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
“China naturally wants to capture back some of the value in its purchases,” said Will Horton, a senior analyst at Capa-Centre for Aviation in Hong Kong. “Assembly and outfitting are a small portion of an aircraft’s total value, and something Airbus and Boeing can part with in order to build their relationships in China.”
China has placed billions of dollars in orders with the companies. In July, Airbus won contracts worth $22 billion to supply state-owned China Aviation Supplies Holding Co. with 100 of the A320-series jets and 40 of its latest twin-aisle A350s. In 2015, planemakers won orders valued at $102 billion for some 780 aircraft.
A travel boom is making China a lucrative market for planes that can fly short and long haul. The number of people flying to, from and within China will almost double to 927 million by 2025, and reach 1.3 billion by 2035, according to the International Air Transport Association. 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 governmentbacked entrepreneur hub. Around that time, a Malaysian pension fund, Kumpulan Wang Persaraan, invested $30 million in Uber, said people familiar with the deal. Less than a year later, the Malaysian government passed national ride-hailing laws that were favorable to Uber and its peers. Lawyers are trying to determine whether there was any form of quid pro quo.
Emil Michael and 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 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. Michael and former Chief Executive Officer Travis Kalanick were aware that Alexander had the medical report, and they discussed it with colleagues. Alexander and Kalanick declined to comment through spokespeople, and Michael didn’t immediately respond to requests for comment. (Bloomberg)