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Former Netflix executive convicted of receiving bribes from contractors

justice.gov

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Re: Former Netflix executive convicted of receiving bribes from contractors

#31

Post by tptacek »

philipkiely wrote: post #14
tptacek wrote: post #8

Earlier quoted context omitted.

The article describes an absolutely standard kickback scheme. If you're an employee of a company and arrange to take kickbacks from vendors without the approval of your employer, you're defrauding your employer.

Gotcha. So, legally speaking, the victim of the crime here is Netflix, and if the exec had performed the same activities with the express permission of someone within Netflix with the authority to authorize such things (IDK, board of directors?) it would not have been illegal? Is there additional/secondary fraud against the vendors as well, or is the fraud strictly against the employer in this situation? (Edit: Board…

The vendors effectively helped defraud Netflix. If Kail initiated the scheme, demanding kickbacks for deals to move forward (as seems likely to be the case given the number of vendors involved) they're unlikely to face consequences, but they're morally culpable regardless.

It is not unlawful to offer incentives to the company itself in order for them to make a deal. In fact, that's effectively how most deals close (the incentive is usually simply monetary and takes the form of a discount). The problem here is that Kail abused his position as an agent of Netflix to profit at their expense.

Re: Former Netflix executive convicted of receiving bribes from contractors

#32

Post by ghaff »

earthscienceman wrote: post #18
philipkiely wrote: post #14

Earlier quoted context omitted.

Gotcha. So, legally speaking, the victim of the crime here is Netflix, and if the exec had performed the same activities with the express permission of someone within Netflix with the authority to authorize such things (IDK, board of directors?) it would not have been illegal? Is there additional/secondary fraud against the vendors as well, or is the fraud strictly against the employer in this situation? (Edit: Board…

This is exactly why I'm confused. I would also like this clarified.

I can't imagine any BoD would be cool with an executive responsible for signing deals getting essentially paid for signing those deals given what a clear conflict of interest that would be. And the BoD itself would probably be found to be failing their fiduciary responsibility under those circumstances.

Re: Former Netflix executive convicted of receiving bribes from contractors

#33

Post by gadders »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

I think a lot of the time the quid pro quo is delayed (or gives that perception)

i.e. executive helps Supplier X sign a at his company. The executive then leaves after a few months to get a senior job at Supplier X

Re: Former Netflix executive convicted of receiving bribes from contractors

#34

Post by mytailorisrich »

joshstrange wrote: post #11

> There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options. I completely get how a startup would take this deal, however gross it is, but what I don't understand is how the exec got away with it from Netflix's side. And the fact this wasn't just 1 but 8 other startups he…

That's the key question.

In all the companies I worked for in the last 20 years he would have been fired instantly.

Re: Former Netflix executive convicted of receiving bribes from contractors

#35

Post by ghaff »

groby_b wrote: post #24
earthscienceman wrote: post #7

Earlier quoted context omitted.

It seems very unclear to me. I don't understand why that's illegal or wrong. Someone was hired and paid using fees and stock options? Seems fine to me. I don't understand corporate structure enough to understand why that's problematic... “leveraged his status as a leader of the IT community in Silicon Valley to subvert the trust of Netflix and others to profit at their expense” How did he leverage it in a way that wa…

"I will only sign this contract on behalf of my company if you give money to me personally" is not in any way ambiguous in terms of morality. If you don't understand why that's wrong, I strongly suggest maybe taking a few philosophy or ethics classes. In short: He was supposed to be acting on behalf of his employer - that's what being an exec means. He instead used the resources of his employer (not his to use, excep…

I'd add that this is an example of why many companies have those eye-rolling annual ethics mini-video classes that they make people take. Because I guess it sometimes does need to be said.

Re: Former Netflix executive convicted of receiving bribes from contractors

#36

Post by tptacek »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

It's even more straightforwardly illegal with government clients, where there is a presumption that the employer (the people) can't possibly be agreeing to a sweetener for the employee.

Re: Former Netflix executive convicted of receiving bribes from contractors

#38

Post by singlow »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

Maybe, but if they are caught they can go to jail too. Several hundred[1] government employees are prosecuted for corruption each year.

[1](https://trac.syr.edu/tracreports/crim/646/)

Re: Former Netflix executive convicted of receiving bribes from contractors

#40

Post by lern_too_spel »

joshstrange wrote: post #11

> There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options. I completely get how a startup would take this deal, however gross it is, but what I don't understand is how the exec got away with it from Netflix's side. And the fact this wasn't just 1 but 8 other startups he…

The journalist got it wrong. The startups weren't victims. They were clearly complicit in the crime. They could have very easily reported the bribery scheme to the Netflix board and gotten him fired, but they took the contract instead. The DOJ claimed that the people at Netflix who used the services assumed they were evaluating the services and not paying for them.

There are many better articles about this story from reputable news sites. The more interesting story from this article is what is Business of Business and Thinknum? Is it another Ozy?

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