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
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 send the bonus check that was due to him. They clearly thought that with the CIO gone, the head of network ops would be down the with the deal.
Unfortunately for them, and fortunately for him, he was absolutely not down with the deal and reported the whole thing up the chain.
We were overpaying for hardware and the previous CIO had been splitting the difference with the distributor.
If it's unclear to anyone on this thread why that is both illegal and immoral... perhaps you are in the wrong business?
> 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.
I think it's because a lot of "hustle" culture and stories of the early business careers of very successful founders involve a bunch of stuff that sure looks like fraud or otherwise like something that ought to be illegal (it may not be, but I mean that it feels like the kind of thing that ought to be illegal, to a normal person) that works out great for them and sure looks like it was a necessary step on their journey to hundreds of millions of dollars and being on the cover of TIME or whatever.
Add in normal corporate business practices just feeling gross as hell on a pretty regular basis, and I can kinda see why people might see this as not really that different from how you're "supposed to" do things—if you aren't a chump, anyway.
Kinda like the college admissions bribery scandal. There was a lot of "oh, so their crime was not being rich enough to bribe the correct way?" in people's reactions, because... well, the system's officially corrupt, in a lot of people's opinions, so prosecuting unofficial corruption feels more like a very fancy organized crime racket putting the screws to the (relatively) little guy to protect their own corruption, than good old feel-good justice.
The worst example of this is the recent NCAA shoe company bribery scandal, where shoe companies paid student athletes and their families to attend particular schools sponsored by the companies. In any other industry, delivering money to people who become a part of your organization and generate revenue for it is just employment, and having your sponsors pay them directly is just cutting out the middleman. Only in amateur sports is that considered bribery and an offense that can get a person sent to prison.
Kickbacks, of course, are quite different, where a company official has a legal duty to negotiate in good faith in the best interests of their company and not make purchasing decisions based on which vendor gives them the biggest personal cut of the deal. It's hard for me to see the other side of that, how anyone can possibly not understand that that is illegal.
This reminds me of the ridesharing debacle. Uber was operating an illegal taxi service which upset a lot of local governments. It was taken to the courts multiple times. Uber won but one of the lessons to young founders was to go for it even if it's not strictly legal - laws can change.
Now I'm not saying what Uber did was necessarily a bad thing. But if I had the idea to disrupt taxi services and learned about the legality of it all, I'd have moved on to the next idea.
YouTube got huge largely due to rampant piracy, in the early days. Straight-up posting copyrighted material unmodified, and all kinds of use of media (songs, especially) in ways that aren't protected by fair use. All while copyright cartels were going after torrent users—YouTube? Made a bunch of people rich, none of them paid for what they knowingly did, and no-one thinks 1/10 as ill of any of them as they do of this guy, now.
What the hell is the lesson of any of this? It sure seems to be "doing unethical and/or illegal things is downright necessary to succeed big-time in business, and doing them successfully will make you rich and, most bizarrely, respected—unless you screw the wrong people (i.e. the bigger scammers/criminals/morally-questionable people) then you're just a criminal and we'll all sneer and spit on you and fine you and send you to prison"
Copyright and taxi-medallion laws are grossly immoral examples of regulatory capture that impoverish and endanger the public in order to provide a much smaller benefit to a small number of "exploiters." YouTube, BitTorrent, and Uber Cab were able to improve this situation, making them very popular despite greatly angering the exploiters. Similarly for, say, marijuana sellers. Doing illegal things that are nevertheless ethically upright and very popular may pay off for a business, as it did in those cases. Or it may not.
It's less likely to pay off when the illegal things are instead unethical, unpopular, and harmful to the public, at least if you get caught—and when they involve betraying the people closest to you, you're probably going to get caught.
When I was in law school, I felt patronized by the amount of time we spent talking about conflicts of interest because it seemed so obvious to me. In retrospect, having read so many of the disbarment announcements in the bar association newsletter, it's clear that a great many people do not understand what a conflict of interest is.
I feel patronised by yearly mandatory training. All of it seems obvious and not relevant to me because I’ve never negotiated a contract on behalf of my employer. Still, good to know there’s plenty of people who might find training useful.
Perhaps I'm naive, but I think the number of people who know and don't care is a small fraction of the people who honestly don't understand that they're doing something wrong. I mean, obviously this guy knew he was doing something wrong, but a lot of people just can't imagine that their own unethical behavior wouldn't be obvious to them.
Haha I do taxes for a living, and the number of times people have said, "My buddy does this and he says it's fine." As if the fact that the person hasn't been caught is evidence that what they're doing is legal. It's what you mentioned, they feel clever and don't think they're doing anything illegal.
Yes, your description is clear and I can see why it's illegal and immoral, but the article is very vague on what's illegal or wrong about it.
The key distinction that you outline is that the CIO did something behind the company's back that the company would almost certainly not have approved of. The CIO defrauded their own company by taking kickbacks in exchange for purchasing agreements; most people can see that as being wrong.
As I'm reading this article with no familiarity or background knowledge, I did not presume that this exec, Kail, was doing something that Netflix would not have approved of and using his position for his own benefit and to defraud Netflix.
If Netflix had been okay with Kail becoming a consultant or partner of the startups that Netflix entered into an arrangement with, then there would be no issue.
Anyways, this article is written as if the reader already knows what happened and what's going on, which is fine but it shouldn't be titled "Why a former Netflix exec is facing ..." It should have instead been titled "Former head of IT Operations who defrauded Netflix will face 7 years in jail."
I think some people may be confused because in the case the the dude was some biz dev type, involved with Netflix _investing_ in the startup, then this arrangement (him being on their board, an advisor, have stock) is quite common. The difference is that here he was the IT director, and Netflix was a customer not an investor, and the arrangement wasn't disclosed.
If, in order for it to work, everyone up the chain from you (or next to you even) has to be unaware of it, it's probably wrong. If the other bidders on a business relationship have to be unaware of it, it's probably wrong. You're basically profiting off ignorance/deception.
I mean, even if you don't understand conflict of interest, this should at least ring a bell.
Candor and integrity should be fundamental values in all people. It's not like you can't conduct a profitable business or become very successful if you prioritize those attributes.
One main reason I started my first computer consultancy was that I found out that although computer stores and Value Added Resellers advertised independent objective advice to customers, they accepted major software & hardware vendors giving bonuses "spiffs" directly to the salespeople, blatantly corrupting their 'objective advice' (vs supporting the overall organization's ability to sell and support the equipment). One of the first things that went in the employee manual, and of course had to can some salesguy who tried to collect a spiff under the radar (our actual practice was the spiff goes to the company or goes uncollected, and if collected, we generally added half to discretionary bonuses).
Pretty small step from that culture of working to directly corrupt "independent" advice to trying to collect it on the other end. I'd like to know how many startups actively offer this kind of deal to execs in order to get the bigger deal?
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 made much difference.
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.
Yes, I'm flabbergasted by a lot of the responses. I've kept clinging on to the idea that everyone must have a moral compass, but the last few years are really hitting home that I may be in a minority to have such clear ideas about what is obviously wrong, and what is obviously right.
Almost everything Trump did or said was in the former category, he cared only for his own benefit it would seem.
A huge number of people don't get why they should vaccinate to protect others perhaps not as immunity fortunate as themselves.
"Myself first, second, and then my fellow, if I stand to gain." (Loosely translated from the Norwegian "først meg selv, så meg selv, og så min neste, hvis det er til eget beste")
Edit: Perhaps I'm clinging on to old ideas. Everything is "obviously" personal choice these days, and who am I to say my values are "better" than theirs. That we should all strive to "do good" is not universal, because why should people be forced to or expected to look after anyone but themselves?
IMO you do a poor job clearly outlining the transgressions and the legal issues at play. You bounce around phrases like "pay-to-play"but as someone not inside the startup world, I didn't get to the end of your article and understand exactly what he did that was illegal/immoral and the context for how it's harmful to startups. In other words, I know he is accused of doing something wrong but that's as deep as my understanding goes.
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 of Director approval is totally hypothetical, I understand that no BoD would ever actually condone such a thing.)
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.
Dinner and drinks are ok as long as they are not excessive and in line with the expected return for the company, say two people discussing business over lunch or dinner, with a maximum of $x / head. Fairly typical companies will have very explicit rules about what is and is not permitted to the point of spelling out exactly how much you are allowed to spend on a business relationship and the reverse: what to do when/if you are offered an invitation to join for dinner and who is to bear the expense.
Vacations are typically forbidden and would immediately be seen as a bribe. This has led to all kinds of things that are practically vacations but officially are business (such as: conferences in sunny resorts, conferences that take three weeks and so on). Other 'entertainment' can come in many different forms and if not disclosed can get both parties in hot water.
On the whole, pay your own way, do not accept anything that might be construed as a bribe afterwards (so no discount on that shiny item from the company you are deciding to do business with, or not), no gifts over a very low dollar value and in case of doubt clear with legal/linemanager/accountant, transparency is key here, just a failure to disclose can turn an otherwise innocent thing into a potential bribe.
It's really not all that hard to keep your nose clean.
Walmart procurement has very strict rules where if they accept any incentives i.e. dinner, drinks, vacation, entertainment, etc are grounds for immediate termination.
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.
I could imagine some slippier cases. A lot of successful startup executives have a bunch of money and invest it in startups. They (of course) pick ones that they think will do a good job in their space. It isn't that crazy to imagine them recommending using a startup they've invested in, and it's also possible to imagine them making a convincing case to a board that the startup is the best option available.
They still can profit massively from that, though, so it's still kind of messy territory.
That's not a grey area at all. If you are a director and you are pushing your board to drive business to a company you have a significant stake in, you MUST disclose that.
A grey area would be more like whether you should offer to leave the meeting while they discuss the proposal.
Yep, I agree. I was responding to the comment from ghaff that they "can't imagine any BoD would be cool" with a deal getting signed in a clear conflict of interest. I can imagine a board going along with it.
Of course, the conflict definitely needs to be disclosed!
Oh I agree. I was really talking about the kickback case as in here. There are other types of conflicts which happen and may be fine so long as the person in question isn't making the decision on their own and, as you say, has disclosed it.
I don't really disagree. Just because there's a potential conflict of interest doesn't mean there's corruption. And the further you get from large companies with internal audit teams and established procurement practices the fewer controls there are the murkier things can get.
Per the peer comment, if you don't disclose the conflict, and let the BoD decide what to do in light of that conflict, then you're into the realm of looking like you're hiding something.
It's the principal/agent problem. If the director is an agent of the shareholders then conflict of interest IS corruption unless you have some sort of safeguard to stop it affecting your behaviour.
What are the disclosure laws if an exec has a stake in a public or private company, and there is an actual or potential vendor relationship with that company?
Are there even laws for this, or is it more about company policies set by the BoD?
Usually disclose and recuse. You’re conflicted, so you shouldn’t make the decision or be involved in making the decision, but if it’s the best vendor for the company the company isn’t prohibited from using their services. Most large companies will have a policy for declaring and managing that type of conflict.
In addition to generic criminal laws against fraud and bribery there’s also honest services fraud (which I’ve mentioned elsewhere in this thread) which boils down to depriving someone to whom you owe a duty of the right to your honest services.
But the article doesn't say that he was taking "kickbacks", but that he was hired as a "consultant". Is that illegal?
"We'd like to do business with Netflix, hmmm whom should we hire as a consultant, maybe someone at Netflix, surely knows a lot about the kinds of companies that do business with Netflix."
Edit: I agree it's immoral just like how FDA leaders approving drugs then getting hired by the drug industry is immoral, but IIRC the problem is that that's just circumstantial evidence... it's hard to prove that what they did was illegal.
His jobs at Netflix is to get the best deal for Netflix, not to get the deal that nets him the most money from the vendor. The vendor paying him is increasing the costs to the vendor, therefore presumably increasing the costs they will pass on to Netflix.
The problem there is the money comes first. In the case of former regulators, by the time they are hired by the drug company they're no longer a regulator. It's not clear the drug company has anything to gain from hiring them. Yes it's grubby, but it's hard to prove anything. If the money comes up front, that's easy to prove.
If they're hiring as a consultant the procurement officer at Netflix that decides to grant them the contract (and Netflix doesn't know about/approve this arrangement), that seems _very_ transparently to be a kickback to me.
> it's hard to prove that what they did was illegal.
Sure, it's a lot of work. That's why we spend money on prosecutors. But they literally _just_ proved that in a way that convinced 12 people "beyond a reasonable doubt", so it's certainly not impossible.
It just seems weird to be asking: "is the described scheme illegal?" in an article describing a conviction for the described behavior, unless you're questioning the validity of the judicial process in this case (which itself is a fine thing to do)
The words you are looking for are 'conflict of interest'. If you are acting on behalf of a corporation and you have such a conflict of interest you are required to disclose it.
Maybe, instead of hiring a single person, you should hire Netflix itself. Netflix itself surely knows a lot about the kinds of companies that do business with Netflix.
Let Netflix worry about compensating the people who are doing the work.
Eh. "you're defrauding your employer." - that gets into an opinion. There isn't a law for that. Like the FEDS tend to do -- they got real creative with "mail fraud" and "wire fraud". I was surprised to not see "racketeering" for the FEDS bs trifecta. Their money laundering charge I would say is 100% bs: creating an LLC isn't laundering -- but who cares! the jury wont understand anything.
Its definitely against standard contractual terms (i.e conflicts of interest terms) and here they would all probably come under fraud in the inducement; i.e Kail induced Netflix to enter into contractual terms based on misrepresentations of what Netflix was gaining when it signed the contract (leaving out his personal gain which absolutely would be a material benefit that netflix itself could have gained had it known those terms existed).
"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."
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 was illegal? I'm not questioning that he did it, I literally don't understand. The diversity of responses here highlights what's confusing. People are saying hiring him at all was the problem? Other responses say that hiring him without Netflix knowing is the problem? It's hard for me to understand the specific transgression.
"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, except on behalf of the employer) to dangle a lucrative deal in front of a much smaller company - which, at this point, is akin to exercising quite a bit of force, because these deals can be make-or-break especially for small places.
He then made that deal contingent on enriching himself personally.
That's about as crooked as you can get without inflicting physical harm.
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.
I don't think anybody is confused about the morality of "I will only sign this contract on behalf of my company if you give money to me personally". The problem is that this is never mentioned in the article. In fact at no point does the article say that the agreement was with the VP and not okayed by the decision makers at Netflix. It seems pretty clear to me why people are confused.
"Michael Kail will be sentenced Oct. 19 in San Jose for taking stock, cash and gifts from tech firms trying to do business with the streaming service."
If nothing else, the "gifts" part makes it clear its personal.
- I work in purchasing approval position for company A
- Company B would like to do business with Company A
- If I say "B, I can get you deal with my employer A, but you need to give me extra money" - this is against every business conduct guideline / contract / terms of employment in every company I worked for, and against law in many jurisdictions.
In case that somehow slipped / you missed it: person was SIMULTANEOUSLY employed by A, while being given money by B to approve things on behalf of A. That's simple kickback / bribery.
It wasn't a morally-dubious but frequently-legal case of "revolving door" where a person does this sequentially. They were approving deals as exec for netflix, and earning money to approve those deals by small companies, at the same time.
I think this is less the fault of the reporter and more an audience that is unfamiliar with the notion of a kickback scheme and why it’s illegal. Might I recommend reading up on what a kickback is?
He was working at Netflix. He ensured that the deals between Netflix and the startups would be greenlit, as long as the startups handed him some cash/stock under the table. It’s classic bribery. The article is a bit confusing by only mentioning the implementation of the bribe (“consulting”), but it’s just bribery.
It's a kickback because there's a clear conflict of interest just as if he were given a week on a tropical island as a quid pro quo even if that quid pro quo only took place in a nudge-nudge wink-week sort of way (which it certainly didn't in this case).
How is it not crystal clear to you what the conflict of interest is here?
When someone hires you to do a job, they hire you to make decisions that are in the best interest of the company. If you are getting paid bribes from suppliers when you buy their services for the company, how can you be trusted to be objective?
I'm curious, what geography do you work in? European country, India, China, USA, Canada? My curiosity is because this seems self evident to me, but it may be cultural thing, and I'm curious to know your cultural background.
Netflix (or, more specifically, whoever they talked to at Netflix) said "Sure, we will buy your product, but you have to pay Michael Kail."
Nine other companies were told the same thing by Netflix.
The question here is whether Netflix paid Netskope because that was genuinely the right thing for Netflix, or whether Netflix paid Netskope because Michael Kail, who had the authority to make purchases using Netflix's money, personally benefited from the deal. It's a conflict of interest.
Maybe a simpler example, and possibly easier to understand: Suppose Michael Kail, in the evenings after he got home from Netflix, started a company called Kailcorp that provided IT services. Then when he got back to the office, he said, "We should sign a deal with Kailcorp and pay them lots of money." Is it clear why this would be illegal / why he would be profiting at Netflix's expense? (Genuine question - maybe it's not.)
If so, then the only distinction here is that Kail didn't start the company himself, he subverted ten other companies (with real products) into the same thing.
It is pretty standard practice to submit any consulting/advisory contracts to HR at your full time employer before you sign the deal. They can verify there is no conflict of interest. You also generally need to declare these relationships when you start a new job. This article is not clear if these procedures were followed. I'm guessing that these deals were secretive, hence the crime.
There was just one catch to landing that deal: It (the startup hoping to do business with Netflix) 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.
That's "pay-to-play"; you don't hire me as an "advisor", you don't get the Netflix contract.
When it's a commonly committed crime but only certain people get prosecuted, it reaks of high-level corruption. Sounds like this exec stepped on the wrong toes.
No, it's just that prosecuting such cases takes a lot of time and effort. Besides that this guy seems to be hell bent on making things worse for himself, he should have probably folded earlier on rather than to keep pushing. Not that I mind.
And 'commonly' doesn't translate into 'every exec does it', but it does happen, in my experience about 2 to 3 percent of the businesses out there have such a thing going on. That's only in my backyard, it is very well possible that different localities or professions would have a multiple or a fraction of that, and it is possible that we're not looking hard enough and that the numbers are much higher.
There's a huge difference between angel investors taking a share of the company and acting as an advisor and what happened here.
When you talk to these angel investors, do they offer you contracts for your new company at their existing companies? Like if you sell product X as part of your new company, are they saying they'll make sure the companies they're involved with buy product X if you give them shares of the company and cash kickbacks? If not then your comparison doesn't hold.
I think what you're describing is an investor in two companies setting up deals between those companies. There is nothing wrong with that because the investor is in the role of a part owner in both cases. They're not an employee of either company. But I'm guessing, it's not clear to me exactly what kinds of arrangements you're referring to.
Hold up -- Angel investors give you money in exchange for equity. That's usually how it works. Are you saying that instead of giving money, these angel "investors" are executives a major companies who are trading customer deals at the company they work for in exchange for personal equity? Or are you just saying that they invest their money and provide connections in addition to their money?
In the primary situation, they are benefiting by getting stock in exchange for giving their company's business to the startup (illegal kickback). In the second situation, they're referring companies they have a personal financial interest in for business to enhance the value of their investment (conflict of interest).
There is also the role of the VCs who facilitate much of this. They use VPs in big companies to offload crappy purpose built startups for huge profits then get their friends to offer the VP sweetheart deals and or future employment. AFAIK the arms-length / chinese walls keep it legal in appearance. Basically any big tech company with lots of money and terrible management is prone to this.
Acquisitions. Say a big company lacks in category, an exec from that company can let a VC know that they would like to buy a company in that category and are willing to pay a certain amount. The VC then goes about bringing the company into existence. Do a song and dance about how it's a real company. Buy a bunch of positive press. Cram it full of new grads. Then before it can collapse under its own weight offload it.
They only go to jail if the kickbacks are obvious. Most of the time it's promises of future employment or employment of federal worker's kids, spouses, family members, or the retaining of a firm they hold an interest in. There's so many ways around the direct illegal approaches.
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.
I'm not saying people don't get away with it but the US government is actually stricter than many/most companies about gifts/perks from organizations that the government is doing business with.
1. It's incredibly illegal for an agent of the government to do this, and people get fired and prosecuted for this.
2. It is possible to couch this in a revolving-door sort of arrangement - once the agent stops working for the government, they get a cushy job at the vendor. In theory, the vendor has no reason to hold up their end of the bargain, once the person they are bribing is out of office. In practice, that person can then leverage their government connections to smooth out future business deals... Which in itself is not illegal, and is convenient cover for the job.
All the time. Michael Kratsios, former Federal CTO, and prior close associate of Peter Thiel gives a contract to a Thiel portfolio company (Scale) for $92M while he's Federal CTO and also undersecretary of the DoD with a fairly opaque budget and procurement (something called a "broad agency announcement"). He retires as Federal CTO and surprise, he's now an executive at Scale. This is all in the open not even subject to innuendo or implication.
In the U.S. government. It happens some, but it totally illegal. It’s hard to get fired working for the U.S. government and this is one of the few ways you can get fired.
It's just as illegal there if you're a government employee. If you're an elected official, general principle still applies but rules are a bit different.
Yes, but there are controls in place to limit it, many large corps have similar controls the problems usually arise when you get unicorns which grow faster than they can build processes to account for stuff like this. I’m sure now Netflix will work on the issue, possibly this case started bec they began working on preventing stuff like it.
This does remind me of Deloitte winning a contract for building a website using technology only Deloitte could use [1]. Surprise, surprise: the website sucked.
there's a long road from "I'll buy from you but don't forget that I retire in 5 years' time, I hope there's a cushy job waiting for me" to "I'll buy from you, here's my bank account, make me a consultant wink wink"
Sole source contracts happen all of the time. Where it becomes murky is if the contracting officer ends up retiring his government job and takes a highly paid job with vendor.
Small criticism but your article wasn't direct about where this exec crossed the line from corporate nepotism to criminal fraud and money-laundering.
The press release from the DoJ details how he structured his kickbacks without netflix's knowledge and set up a shell company to do so -- even lying directly to netflix leadership:
"When an inquiry from the Netflix CEO ensued, Kail falsely denied that he was formally working with Platfora."
Criticisms aside, thank you for helping to shine a light on corporate malfeasance.
I've definitely seen a fair amount of brazen stuff like this over several decades in IT. One path that's pretty interesting to follow is announcements about new board members at software providers.
Often, you can see their prior (or even current) job, and press releases about them selecting that software some short(ish) time before.
> Often, you can see their prior (or even current) job, and press releases about them selecting that software some short(ish) time before.
That may or may not be a problem, depending on policies and how it was handled.
Generally, you need to disclose any conflicts of interest. Then, its up to your company on what will be done next. You are probably going be removed from the actual decision-making process (regardless if you are ultimately going to be the one closing the deal - after your peers approved the decision).
If everything was disclosed and there was no kickbacks, it might have been ok (although the press release may overstate the role they played in the selection).
If not, you may be in hot water with your company and even the justice system.
If you are aware of such stories I'd caution against sharing the details with people online without first ascertaining your own legal position before passing this information on.
