Former Netflix executive convicted of receiving bribes from contractors • Hacker News Board

Re: Former Netflix executive convicted of receiving bribes from contractors

#391

Post by borski » Wed, Oct 20, 2021, 8:42 AM UTC

tptacek wrote: post #43

The DOJ press release is clearer than this article is: https://www.justice.gov/usao-ndca/pr/former-netflix-executiv... Some fun details: Kail did his criming through a shell LLC he set up called "Unix Mercenary". He took between 10-15% of the total billings for each of the companies he hooked up with this scheme. None of those companies were charged (more's the pity). They got him on mail fraud, wire fraud, honest se…

Do you have a link to the sentencing memorandum? I haven’t been able to find it.

Re: Former Netflix executive convicted of receiving bribes from contractors

#392

Post by heavenlyblue » Wed, Oct 20, 2021, 10:14 AM UTC

mandevil wrote: post #327

ransom1538 wrote: post #319

Earlier quoted context omitted.

Is there any gray here? Example: you continue a contract with NewRelic and they buy you a fancy dinner at a michelin restaurant. You go with Splunk and they buy you a vacation in Hawaii to talk things 'over'. Seems like if you aren't taking cash - things can get gray real fast.

Every company I've worked for (all US based) has had corporate policies on just this subject, because they are aware that this is a major danger for them, either giving or receiving. When I worked for a government contractor we weren't even allowed to give rides to government employees in our rental cars when we were all together on a business trip, to make sure that even a line that trivial was not crossed. Generall…

I work for a finance company in the UK and the training we get is exactly the same as you described (Even the price of gifts we're supposed to report is in the same range).

Re: Former Netflix executive convicted of receiving bribes from contractors

#393

Post by jacquesm » Wed, Oct 20, 2021, 10:15 AM UTC

mbesto wrote: post #332

jacquesm wrote: post #281

Earlier quoted context omitted.

> how many of these cases do you miss because the recipients use a not easy traceable proxy entity to collect the payment? That's the 'million dollar question', and in some cases substantially more than one million. I think the reason a good number of these people get caught is (1) things like the Panama papers and other leaks like that have made it harder to do this, and have also brought the not insubstantial resou…

> It's typically quite a surprise when we start asking about the activities of companies that the other party believes are well hidden. Also, if you do tech DD - most techies are happy to share details that unknowingly might expose because they tend to be less business savvy. CEO/CFO's on the other hand...

That's a fact.

Re: Former Netflix executive convicted of receiving bribes from contractors

#394

Post by jacquesm » Wed, Oct 20, 2021, 10:16 AM UTC

jjeaff wrote: post #331

jacquesm wrote: post #99

Earlier quoted context omitted.

We always check the corporate registries to see if any of the legal entities the execs of a company are related to are making substantial turnover from either the company we are looking at, or a subsidiary. In 200+ DDs this has happened a handful of times. So I would not say it is a common thing but it definitely does happen, and often enough that we feel the need to at least try to establish if it is the case during…

That of course wouldn't have found this particular type of conflict unless you are able to look into the companies that your vendors are dealing with.

That's not how this works. How it works is like this: we have some expectations about what things should cost, if something is wildly deviant from the regular market rate then that's worth looking into.

Re: Former Netflix executive convicted of receiving bribes from contractors

#395

Post by jacquesm » Wed, Oct 20, 2021, 10:22 AM UTC

tootie wrote: post #233

numbsafari wrote: post #44

Earlier quoted context omitted.

The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice. Long ago, before Dotcom went Dotbomb, I worked for a firm where the CIO was being paid kickbacks by our hardware reseller. He was terminated for other reasons and, shortly after he left, our head of network ops got a call from the distributor asking where they should s…

I think the current generation has absorbed so much cynicism that a concept like a legally enforceable honest service just seems like a joke. It's a blanket assumption that everyone is out for themselves so why punish anyone for it. I've never personally observed or even suspected a kickback from having been paid, but vendor selection and contract enforcement is so arbitrary I'm not sure any corruption would have mad…

I've been on the receiving end of attempted bribery and other attempts at pressuring a couple of times and I made sure the party attempting that would never ever do it again. Daylight really is a pretty good desinfectant.

Re: Former Netflix executive convicted of receiving bribes from contractors

#396

Post by bogwog » Wed, Oct 20, 2021, 1:01 PM UTC

Phillip98798 wrote: post #354

bogwog wrote: post #312

Earlier quoted context omitted.

> Oh, you visited the stackoverflow career page during your 9-5? That's fraud. I'm exaggerating So you're saying that what this guy did isn't clearly fraud? I don't see how you could say that, unless you misunderstood the situation. It is, very clearly, 100% fraud. In addition to the money Netflix was paying him as part of his salary, he was also secretly taking a cut of the money flowing to contractors. It's like wh…

Outside SV, I have friends in manufacturing. They tell me stories like this all the time. They have to get this executive on their side to win this deal or that deal. I wouldn't dare try to defend the morality of it, but this is capitalism right? I personally believe the corrupt officials example you bring up is much worse than this though. One is often a life and death situation and the other is about protecting the…

> but this is capitalism right?

Nope, just fraud. If a contractor makes a deal with the company, that's perfectly fine, normal capitalism. If they make a personal deal with an executive who is supposed to be representing the company in negotiations, then that's straight up bribery.

Capitalism certainly motivates people to commit this type of fraud, but that's why we have laws and regulations. Unregulated capitalism doesn't work.

I'm not saying it doesn't happen, or even that it isn't common (this whole comment section suggests that it's quite rampant), just that it's clearly wrong, both from a moral point of view, and because it can cause damage to shareholders. It can even hurt the larger market and society because it means that a company with a superior product/service/innovation will fail because their competitors aren't playing fair.

> the other is about protecting the interests of a successful multi-billion dollar corporation.

It's about protecting shareholders. What would the economy look like if the government didn't make an effort to prevent fraud? Investors wouldn't want to invest, companies wouldn't be able to find funding, etc.

Re: Former Netflix executive convicted of receiving bribes from contractors

#397

Post by germandiago » Wed, Oct 20, 2021, 1:29 PM UTC

jollybean wrote: post #343

HatchedLake721 wrote: post #183

Earlier quoted context omitted.

I know it's a complicated topic, but lobbying can be considered as corruption. E.g. a group with socioeconomic power is corrupting a law in order to serve their own interests. And US is very well known for its lobbying that people are trying to limit.

Lobbying does not imply that the politician is receiving any benefit, in fact, there's a lot of rules in place for that. So, the disproportionate power that corps. may have is an issue of equality, but that's not this kind of corruption, at least not directly.

Politicians should not have power to rule. There are 1 million ways to benefit indirectly from favors to lobbies, do not be innocent. Sometimes demonstrating corruption is really difficult.

You are worried about business that give people improvements or products every day, but you are not worried about regulators that twist stuff to get benefits without producing anything for people and that tax the people that produce?

I always found this view strange: someone that has nothing to do with benefiting others telling that they are good because they f*ck up the people that benefit societies. Yes, they do. Yes, not because they are good, maybe because there is mutual interest. No problem.

Do not tell me about corporations that have monopolies or a lot of power. All those come from absurd regulations. In the absence of them, things would be better. And more fair.

Re: Former Netflix executive convicted of receiving bribes from contractors

#398

Post by omarhaneef » Wed, Oct 20, 2021, 2:29 PM UTC

AlexanderTheGr8 wrote: post #377

omarhaneef wrote: post #65

One item seems to have caused a lot of confusion in the comments so I will take a stab at clarifying: It is perfectly legal for Netflix to ask for options or any other consideration in exchange for the contract. Companies do this sort of thing frequently. They know that merely signing a large contract with a large firm will increase the value of the contractor. It is not legal for someone working for Netflix to ask f…

I am confused. Why is the company allowed to do this and not any employee. I mean, isn't this insider trading on the company's part? They could in theory take options, then after the value of the firm increases, they could sell them and pay the money to their execs - isn't this strategy just an elaborate insider trading scheme?

Insider trading is illegal because it is theft from the company, not because it is unfair. Hedge funds spend a fortune gaining an advantage that is material and non-public. The key is that they didn't steal it from the company.

So if the buying company forced an employee to give them options without the selling companies consent, that would be insider trading. But if the deal is company to company, then there shouldn't be an issue.

To quote Matt Levine: This is definitely not legal advice.

Re: Former Netflix executive convicted of receiving bribes from contractors

#399

Post by tptacek » Wed, Oct 20, 2021, 2:39 PM UTC

borski wrote: post #335

taurath wrote: post #294

Earlier quoted context omitted.

It’s incredible to me that the one being bribed gets a conviction but the corporation doing the bribing gets absolutely no punishment, other than people reading on here knowing Sumo and Netskope have questionable business practices and we’re willing to wire a percentage of netflix’s fees to a shell Corp. Or maybe he was just that good about hiding it, IE only soliciting via the business entity which then took a “comm…

It is entirely possible the 'briber' did not know. Companies, particularly startups, tend to assume that the other party will 'do the right thing' and quite literally may not know any better. Ignorance isn't a defense, but assuming that the other party will properly disclose the conflict of interest is not an unfair assumption; that Kail didn't is, frankly, the main problem here, at least with regard to shares. With…

They arranged to pay him a percentage of their billings. It strains credulity to think they might have believed it was innocent, or sanctioned by Netflix. We should all be looking at these companies differently now.

Re: Former Netflix executive convicted of receiving bribes from contractors

#400

Post by grantc » Wed, Oct 20, 2021, 2:46 PM UTC

ransom1538 wrote: post #319

tptacek wrote: post #43

The DOJ press release is clearer than this article is: https://www.justice.gov/usao-ndca/pr/former-netflix-executiv... Some fun details: Kail did his criming through a shell LLC he set up called "Unix Mercenary". He took between 10-15% of the total billings for each of the companies he hooked up with this scheme. None of those companies were charged (more's the pity). They got him on mail fraud, wire fraud, honest se…

Is there any gray here? Example: you continue a contract with NewRelic and they buy you a fancy dinner at a michelin restaurant. You go with Splunk and they buy you a vacation in Hawaii to talk things 'over'. Seems like if you aren't taking cash - things can get gray real fast.

It depends on you and your company's ethical take. Personally, if a vendor is providing anything of value to me, I might as well be taking cash from them. This includes sporting events or concerts, meals, golf, xmas gifts, whatever. If you work for a company that the vendor wants badly for the money or the credential, vendors are going to throw all of these things your way. I keep it simple: if we need to do business, I have a perfectly good conference room and we can do it there.

One area that's more fuzzy is free passes to user events, i.e., a DreamForce or Oracle World. We clear these per our process and are fine to accept them because we were going to spend money on sending someone anyway. We saved the company money. Also: it was never indirect between individuals, it was company to company.