According to sources, the U.S. Justice Department has started a preliminary investigation into whether managers at Uber violated a federal law against foreign bribery.
The Wall Street Journal, citing people familiar with the matter, reported news that the agency has begun to review allegations that Uber may have violated the Foreign Corrupt Practices Act (FCPA), a 1977 law which bans the use of bribes to foreign officials to get or keep business. The FCPA has seen an increase in enforcement over the last decade and requires firms to keep accurate books and records, including on foreign transactions.
Based on its findings, the Justice Department may or may not decide to open a full-fledged FCPA investigation into Uber. It is unclear whether the investigation is focused on one country or multiple countries where the company operates.
A company spokesman confirmed Uber is cooperating with the Justice Department on the preliminary investigation. “As a matter of policy, the department generally neither confirms nor denies the existence of an investigation,” a Justice Department spokeswoman said.
Uber has spread rapidly to more than 70 countries over eight years, in part by giving regional teams authority to adapt to local markets and expand quickly, sometimes ignoring local laws in the process. In South Korea and France, for example, the company was found to have violated transportation laws. And in Singapore last year, local managers bought more than 1,000 defective cars and rented them out to drivers, fixing the issue only after one of the cars caught on fire.
In addition, the Justice Department is separately pursuing a criminal investigation into “Greyball,” a software tool Uber employees used to evade law enforcement officials. And earlier this month, Uber settled Federal Trade Commission charges that it didn’t offer sufficient privacy protections for its users.
The news of the preliminary investigation comes as Uber is getting ready to bring in a new chief executive, Expedia Inc. CEO Dara Khosrowshahi, to replace Travis Kalanick, who resigned in June following months of scandals and legal issues. Kalanick still sits on Uber’s board and is involved in a lawsuit with the company’s biggest investor, Benchmark, which is looking to eliminate three board seats added when he was CEO.