Published: Tue, August 15, 2017
Economy | By Melissa Porter

Uber investor sues ex-CEO over alleged fraud

Uber investor sues ex-CEO over alleged fraud

Investors Shervin Pishevar of Sherpa Capital, Ron Burkle of Yucaipa Companies and Adam Leber, an angel investor who works for music company Maverick, signed the email and said Benchmark's lawsuit harms Uber Technologies Inc's [UBER.UL] valuation, interferes with fundraising efforts and impedes the company's search for a new CEO to replace Kalanick, according to the email sent to shareholders and board members.

That board - and its support for former CEO Travis Kalanick - was the subject of a lawsuit filed Thursday in Delaware Chancery Court by Benchmark Capital Partners. It accused Kalanick of breaching his fiduciary duty and contractural obligations by loading up Uber's board with friends.

Benchmark claimed in its suit that it would never have approved a 2016 expansion of Uber's board that allowed Kalanick to fill a board seat had it been aware of the controversy surrounding Kalanick and of Uber's cultural problems.

It wants to remove him from board - and get rid of the three extra seats added by Mr Kalanick.

Axios, which first broke the story, quoted a Kalanick spokesman who called the suit "a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder".

But while he is no longer chief executive, he remains on Uber's board and has the power to appoint three members.

A spokesperson for Kalanick said the lawsuit is "completely without merit and riddled with lies and false allegations". According to ArsTechnica, the investors think, Benchmark's action "held the company hostage to public relations disaster".

Uber declined to comment.

The shareholders said they had investors ready to acquire the shares "as soon as we receive communication from Benchmark that they are willing to withdraw their lawsuit and sell a minimum of 75 per cent of their holdings".

Uber has been embroiled in controversies since the beginning of the year - from widespread allegations of sexual harassment and discrimination that led to an internal probe to secret software used to thwart law enforcement and track rival drivers.

Senior vice president of global operations Ryan Graves was the subject of news as he revealed his intention to see himself out of his current position by September, ABC News reported.

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