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Uber hired oligarch-linked Russian lobbyist despite bribery fears | Uber

Uber hired oligarch-linked Russian lobbyist despite bribery fears | Uber

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Uber hired oligarch-linked Russian lobbyist despite bribery fears | Uber

Uber secretly hired a political operative linked to Russian oligarchs in an attempt to buy influence in the country, despite concerns that paying the lobbyist risked bribes being paid to “grease the skids”.

The deal was part of a concerted effort by the Silicon Valley company to court several billionaires as well as top state officials allegedly aligned with Vladimir Putin in an attempt to secure its place in the Russian market.

Uber’s previously unknown lobbying campaign in Russia is laid bare in the Uber files, a leak of more than 124,000 documents to the Guardian. They reveal how in 2015-16 Uber tried to secure influence at the highest levels of the Russian state by approaching oligarchs said to have close ties to the Kremlin and encouraging them to invest in the company.

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What are the Uber files?

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The Uber files is a global investigation based on a trove of 124,000 documents that were leaked to the Guardian. The data consist of emails, iMessages and WhatsApp exchanges between the Silicon Valley giant’s most senior executives, as well as memos, presentations, notebooks, briefing papers and invoices.

The leaked records cover 40 countries and span 2013 to 2017, the period in which Uber was aggressively expanding across the world. They reveal how the company broke the law, duped police and regulators, exploited violence against drivers and secretly lobbied governments across the world.

To facilitate a global investigation in the public interest, the Guardian shared the data with 180 journalists in 29 countries via the International Consortium of Investigative Journalists (ICIJ). The investigation was managed and led by the Guardian with the ICIJ.

In a statement, Uber said: “We have not and will not make excuses for past behaviour that is clearly not in line with our present values. Instead, we ask the public to judge us by what we’ve done over the last five years and what we will do in the years to come.”

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But it is the arrangement with Vladimir Senin – an influential lobbyist at the time and now a pro-Kremlin member of the State Duma – that could prove most damaging to Uber. Former US prosecutors and corruption experts said the circumstances in which Uber hired Senin in 2016 should have raised “red flags” and risked breaching US anti-bribery laws.

Uber accepted it had hired Senin and paid him hundreds of thousands of dollars, but said it did not believe there was any violation of the law. Referring to his ties to Putin, a company spokesperson said: “We certainly would not engage with Mr Senin or others like him today.”

Uber’s relationship with Senin was one pillar of an aggressive push in Russia, when the company elbowed its way into a potentially vast market before encountering threats from state agencies, prosecutors and competitors.

Vladimir Senin at a banking forum in Sochi in 2017
Vladimir Senin at a banking forum in Sochi in 2017. Photograph: Artur Lebedev/imago/Itar-Tass

With few friends in Moscow and no Russian investors, Uber initially turned to Roman Abramovich before securing deals with companies controlled by the billionaires Alisher Usmanov, Mikhail Fridman and Petr Aven, as well as Herman Gref, the head of the major state-controlled Russian bank Sberbank.

Each of the powerful figures Uber secured as a partner in Russia – a market it has since exited – has subsequently been placed under western sanctions in response to Putin’s invasion of Ukraine this year, accused of having benefited from strong ties to the president and his inner circle.

Usmanov, Fridman and Aven are contesting EU sanctions against them. Fridman and Aven have described the basis of the sanctions as “spurious” and spoken out against the invasion. Usmanov has said it is “incorrect” to depict him as associated with Putin.

But the files show that between 2015 and 2016 Uber’s objective was to enlist the business magnates as “strategic allies”, offering their companies coveted shares in the Silicon Valley company before a widely anticipated stock market flotation.

In return, Uber wanted political support.

The strategy replicated Uber’s approach to lobbying in other parts of the world, which frequently went above the heads of regulators and officials to curry favour with prime ministers, presidents and powerbrokers.

Responding to the Guardian’s findings, Uber’s spokesperson said its current leadership “disavows any previous relationships with anyone connected to the Putin regime”.

Ultimately, Uber’s brazen and transactional lobbying strategy appears to have misjudged the political realities of an increasingly authoritarian Russia hostile to a brash American startup.

An Uber taxi in Moscow
An Uber taxi in Moscow. Photograph: Alexander Sayganov/Sopa Images/Rex/Shutterstock

Uber in effect retreated from Moscow in 2017 and earlier this year announced it would “accelerate” the sale of its remaining stake in a joint venture with Yandex, a partnership that had kept its brand alive in the country.

However, the Uber files raise pressing questions for the company’s current leadership about Russia, its stance toward corruption red flags, and the firm’s decision to dive headfirst into some of the murkiest political waters it encountered in its global expansion.

The ‘power rating’

Uber’s first major PR crisis in Russia began in September 2014. After a nationalist member of the Duma publicly denounced it, Moscow city officials backed calls for the Kremlin to ban the cab-hailing app. Fearing a backlash, executives ordered security guards to its office.

Uber’s man on the ground in Moscow warned colleagues that Putin’s party in the Duma could seize on the opportunity to “retaliate” against the company.

Days later, senior executives at Uber’s San Francisco headquarters began discussing potential Russian investors. In an email to the company’s chief lobbyists, Emil Michael, the head of business at Uber, floated the industrial tycoon Abramovich as an option.

“I think we want someone aligned with Putin,” he wrote, acknowledging he knew little about Russian politics.

Roman Abramovich.
Roman Abramovich. Photograph: Justin Tallis/AFP/Getty Images

Documents show that in the months that followed, a strategy emerged: find an oligarch or someone with sufficient clout who could invest in Uber, incentivising them to serve as a political ally in Moscow.

Uber first approached Abramovich’s top lieutenant, and by February 2015 an internal email said the oligarch was “actively looking” at a deal. When talks failed, an Uber executive reported that Abramovich had “decided not to invest owing to high valuation, but has offered to help”.

Abramovich, who has denied claims about his proximity to Putin, did not respond to repeated requests for comment from the Guardian.

Undeterred, Uber tasked political consultants in Moscow with drawing up a list of oligarchs and assessing their potential as “strategic partners” based on their influence among Russian elites and ties to the state. The study produced a leading contender: Usmanov, the Uzbek-born metals and technology magnate.

According to the consultants, Usmanov enjoyed “the confidence of top state officials” and maintained longstanding relationships with close Putin associates. A similar list gave tycoons a “power rating” and awarded Usmanov the highest score.

Uber approached one of his top executives and received an instant reply. With things moving quickly, Michael adopted a note of caution: “We got to be clean with Russian investors, but at the same time not insult them so let’s be careful what we say.”

Uber secured a $20m investment from the billionaire’s holding company USM months later. A spokesperson for Usmanov said the deal was brokered by an investment bank and was a “purely financial investment” with “nothing to do with politics or the Russian government”. He said USM made “no promises or commitments” to Uber regarding government relations and any suggestion that Usmanov was associated with Putin was “incorrect”.

However, for Uber, politics appears to have been at the forefront of its approach to all the oligarchs in its sights. After USM’s initial investment, Travis Kalanick, Uber’s then chief executive, met two of Usmanov’s top executives at Davos in January 2016 in an effort to raise more money. A briefing prepared for the meeting described Uber’s messaging: invest and “give us government relations support”.

Alisher Usmanov at his office in Moscow in 2017
Alisher Usmanov at his office in Moscow in 2017. Photograph: Bloomberg/Getty Images

The Russians were receptive, an internal note suggests. “USM made the pitch as to what they could do to move the needle on the policy front.”

Davos dealmaking

But Usmanov wasn’t Uber’s only Russian backer, and it was in the Swiss alpine resort the company forged a deal with another powerful oligarch.

On the fringes of the 2016 World Economic Forum, Kalanick squeezed in a crucial meeting at the palatial five-star Belvedere hotel with an emissary from LetterOne (L1), a private investment vehicle controlled by Fridman.

With his fellow oligarch Aven, Fridman ran Alfa Group, a sprawling Russian conglomerate. The pair had accumulated vast fortunes in the economic chaos after the fall of the Soviet Union. Helpfully, they were by now deeply integrated in the western financial system.

Weeks after the Davos meeting, a press release heralded L1’s $200m investment, with Fridman personally championing the partnership. But executives appeared keen to ensure a key aspect of the deal remained secret.

Alongside the $200m investment, Uber granted L1 a package of warrants that gave the firm the option to later purchase $50m of additional Uber shares at an advantageous price. The warrants would vest if Uber’s trips in Russia continued to grow.

Documents suggest Uber designed the warrants to “incentivise” and “motivate” L1 to help the US company solve its political and regulatory issues in Russia, something L1 had offered to help with.

The senior in-house Uber lobbyist Mark MacGann explained to colleagues that Uber would in effect underwrite “the day-to-day heavy lifting” that L1 would “undertake on our behalf in the Duma and with the presidential administration”.

For Uber, it was an attractive deal. A veteran Moscow lobbyist reassured MacGann that if Fridman got involved, he could help with one of Uber’s key objectives in Russia: influencing and accelerating the passage of draft taxi legislation through the Duma.

Mikhail Fridman at a conference in Moscow in 2019
Mikhail Fridman at a conference in Moscow in 2019. Photograph: Pavel Golovkin/AP

The lobbyist said Uber would need the Kremlin’s support, but “if Alfa is undersigning it – they can do it”.

Uber’s spokesperson said L1 was not obliged to meet any deliverables related to lobbying. She denied the warrants were secret, saying they were approved by Uber’s board, but added: “We would not do the same deal today.”

L1 said it became a “modest investor” in Uber partly thanks to “customer acquisition opportunities” between the US company and other businesses in Russia controlled by Aven and Fridman. A spokesperson said L1 – which divested itself of its Uber stock in 2019 and is not subject to any sanctions – did not “provide any services relating to lobbying” but accepted an agreement existed for L1 to provide “strategic advice and assistance”.

Fridman and Aven, who both resigned from L1’s board in March, denied any involvement in the firm’s investment in Uber or in any lobbying for the company. Asked about internal Uber records saying Aven was “very familiar with all of the deal terms and incentives” linked to the L1 deal, the oligarch said: “Absolutely not.”

‘A direct line into the Kremlin’

When Uber took stock of its Russia strategy in the spring of 2016, executives believed they were making progress. An internal memo – titled “Taming the bear” – said Uber now also enjoyed the “personal support” of Fridman and Aven, as well as Gref. “With their support we have, in theory, a direct line into the Kremlin,” it optimistically noted.

Uber first began courting Gref in the summer of 2015 when its top lobbyists, MacGann and David Plouffe, a former White House aide, visited the powerful state banker, taking a gold-plated private elevator to his office at Sberbank’s Moscow headquarters.

In September 2015, Uber consummated the relationship and signed a partnership with Sberbank, which Gref ran, to work together on shared services. Almost immediately, Gref’s senior staff turned to helping Uber with one of its principal lobbying targets: the mayor of Moscow.

Moscow’s mayor, Sergei Sobyanin
Sergei Sobyanin. Photograph: 8523328/Getty Images

As mayor, Sergei Sobyanin and his influential deputy who oversaw city transport policy held considerable sway over Uber’s operations. When executives won concessions in negotiations with Sobyanin’s staff, they described Sberbank’s role in the deal as “very helpful”. Gref did not respond to requests for comment.

Months later, Gref hosted a formal dinner for Uber at an exclusive Moscow golf club. At the event, Kalanick and his executives mingled with senior government ministers and officials, including the mayor’s deputy. It came weeks after Sberbank made a symbolic $5m investment in the company.

Although the state-controlled bank was the subject of limited US sanctions at the time, Uber judged it was permitted to receive the funds.

In the buildup to the dinner, Uber’s hopes for a Russian expansion were high. One of its key Russia advisers assured MacGann: “There is not another foreign company for whom Gref would be acting as a personal fixer.”

Risky business

Uber, however, was discovering lobbying in Russia was an expensive business – and a risky one, too. Of all its efforts to cultivate oligarchs, the investment it received from Fridman and Aven’s investment group, L1, looked to be the most rewarding for Uber. But there was a catch.

The leaked files suggest that L1 recommended Uber separately hire Alfa’s chief in-house lobbyist, Senin, then a senior executive at Fridman’s bank and political operative who held a senior position in a pro-Kremlin and business-friendly political party. He now sits in the Duma.

Uber executives internally described Senin as “the investor’s appointed lobbyist”; however, L1 says any relationship with Senin was entirely at the discretion of Uber.

Bemused at the notion of making a large side payment to a political fixer, executives balked when Senin quoted $800,000 to influence the taxi legislation and lobby government officials. “It is so much money,” wrote one senior Uber executive.

But the alarm did not end there. Emails suggest Uber’s lawyers raised concerns that paying Senin risked breaching US anti-bribery laws. A senior executive told colleagues that lawyers were “rightly concerned about bribes being paid to grease the skids”.

He said there was no “absolute way to prevent this” apart from telling L1 it needed to make clear to Senin “bribes will not be tolerated”. “Basically [the lawyers] think this lobbying work should be paid for by L1.”

Despite the risks, Uber pressed forward and in May 2016 initially agreed to pay Senin as much as $650,000.

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With Senin onboard, Uber began “proactively” influencing the drafting of the taxi legislation. Documents suggest L1 introduced Uber to the co-sponsor of the legislation in the Duma, while Senin worked with the MP on rewriting the draft law to ensure it was more favourable to Uber.

Former US federal prosecutors and corruption experts told the Guardian and Washington Post the circumstances surrounding Uber’s payment to Senin raised red flags and risked breaching the US’s Foreign Corrupt Practices Act (FCPA).

Among the red flags Uber should have identified, they agreed, was Senin’s position in the pro-Kremlin political party . Under the FCPA, a US company is prohibited from corruptly paying – or offering to pay – a foreign political party official to induce them to use their influence.

Jessica Tillipman, an FCPA expert at George Washington University, described Uber’s deal with Senin as a “super high-risk transaction” and a “blazing red flag”. “There are many companies that would opt to walk away from something like this,” she said.

Eventually the taxi legislation ran into trouble and did not pass. The failure prompted doubts about Senin, and Uber paid him a reduced sum of $300,000 for his work.

When Senin emailed Uber his invoice in July 2016, he asked for the funds to be wired via a New York bank to an account in Russia for a company created on the day he had signed the Uber contract months earlier. In the email, sent to a senior Uber executive, Senin used a pseudonym: “Alter ego.”

Senin did not respond to multiple requests for comment.

In a statement, a spokesperson for Kalanick said his “role was limited to a trip to Russia that included a few meetings arranged by Uber’s policy and business development teams”.

Uber CEO Travis Kalanick attends the “Technology Tipping Points: Digital Ubiquity” session of 2016 Summer Davos Forum in Tianjin, China
Travis Kalanick, Uber’s then CEO, in 2016. Photograph: VCG/Visual China Group/Getty Images

She said Kalanick had “acted at all times lawfully and with clear approval and authorisation of Uber’s legal team”. She said: “Mr Kalanick is not aware of anyone acting on Uber’s behalf in Russia who engaged in any conduct that would have violated either Russian or US law.”

MacGann said he had concerns about paying Senin, which “was clearly irregular”. “I made my concerns clear to the management team in San Francisco.”

For its part, Uber said it paid Senin “to compensate him for three months of work and terminated its relationship with him prior to the enactment of any legislation”. The company’s spokesperson said Senin’s contract contained “robust anti-corruption provisions”, adding: “We do not believe that any FCPA violation exists.”

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