Saudi Arabia’s Ownership Stake and Governance Role in Uber Draw Company into a Reputational Storm
11/13/19 – – About 10 years ago, I was in a noisy Manhattan restaurant sitting across from a prospective client, straining to hear what he was saying. The hustle and bustle of the place, combined with my lunchmate’s very thick accent, had me leaning over the table well past the bread basket. “Our collection methods may be an issue for Americans,” whispered the head of public relations for a large multi-national financial institution planning to introduce their retail banking services to North American consumers.
“What’s your concern?” I asked.
“In my country, lending to individuals is a new thing,” he explained, lowering his voice and glancing at the people seated at the tables to either side of us. “Recently, we received some negative media coverage regarding the aggressive collection tactics used by the representatives we hired to contact borrowers behind on their mortgage payments.”
“Several delinquent borrowers lost their lives.”
With my tie hovering dangerously above my pasta, I asked, “You killed them?”
“No,” he assured me, “our third-party representatives did — without authorization. I assure you we are holding them accountable for their mistakes. Of course we will adjust our policies and procedures to respect your culture and customs here in the United States. Do you think you can help us tell our story?”
I hadn’t thought about that frightening lunch for many years. But it all came back to me when I read about the trouble Uber CEO Dara Khosrowshahi got himself into over the weekend.
In an otherwise uncontentious interview on HBO’s Axios channel, Khosrowshahi was drawn into an awkward discussion of last year’s horrific assassination of Saudi dissident and Washington Post journalist Jamal Khashoggi. How did this subject come up? Saudi Arabia’s Public Investment Fund is Uber’s fifth-largest shareholder, and the head of the country’s sovereign wealth fund, Yasir al-Rumayyan, is a member of the company’s board of directors.
When Khosrowshahi was asked about the state-directed murder, he described it as a “mistake,” comparing it to a fatal accident involving a self-driving Uber car in 2018: “We’ve made mistakes too, right, with self-driving, and we stopped driving, and we’re recovering from the mistake. So I think that people make mistakes.”
Response on social media was fast and fierce.
The Washington Post’s Global Opinions editor (a former colleague of Jamal Khashoggi) tweeted: “If one of @Uber‘s main investors kills someone it doesn’t really matter. A representative of a murderous regime can still keep a board seat . . . When you’re rich, your crimes become ‘mistakes.’”
As #BoycottUber gained momentum online, an upset Uber customer tweeted: “Yea Dara I made a mistake too. I installed Uber app on my phone and I was using it to get rides but now I deleted it and will not repeat my mistake until the hell freezes over.”
Trying to quiet the storm, Khosrowshahi tweeted this apology: “There’s no forgiving or forgetting what happened to Jamal Khashoggi & I was wrong to call it a ‘mistake.’ As I told @danprimack after our interview, I said something in the moment I don’t believe. Our investors have long known my views here & I’m sorry I wasn’t as clear on Axios.”
Why did Uber’s still-unfolding crisis trigger memories of my uncomfortable lunch meeting?
Maybe Thomas Friedman has the best explanation. He’s the Pulitzer Prize winning author of “The World is Flat: A Brief History of the Twenty-first Century.” In his 2005 bestselling book, Friedman makes the case that dramatic technological and social advances have accelerated the pace of globalization, leveling the playing field for countries and cultures that have very little in common. This flatter world allows business investment to flow more freely than ever before. That helps make it easier for a country like the kingdom of Saudi Arabia to be a major shareholder of an American company like Uber.
Sounds like a wonderful development. But there are consequences.
Consumers, especially in America, are becoming more and more interested in the character, purpose and priorities of the companies with which they do business. When public companies are funded by nations that don’t share our commitment to democratic values and human rights, tension — and ultimately boycotts — are inevitable.
During the Axios interview, Dara Khosrowshahi found himself trapped in a difficult situation many other CEOs (and crisis counselors) should be preparing for. Just last month, the NBA experienced a similar situation when Daryl Morey, general manager of the Houston Rockets, fired off a tweet in support of demonstrators in Hong Kong, just as NBA teams were beginning a series of exhibition games in mainland China — an enormous emerging market for the NBA, Nike and other U.S. companies. Public outrage in the U.S. ensued when NBA officials and athletes appeared to dismiss American values and apologize to the authoritarian Chinese government for Morey’s defense of democracy.
Warning to corporate communicators and investors: The world may be flat, but American consumers will hold companies accountable for the financial support they receive from nations like Saudi Arabia and China. Boards of directors will have to decide if the flow of funds is worth the potential damage to reputation and trust. It’s hard to believe, but in the Axios interview Uber’s CEO appears to be dealing with questions about Saudi Arabia’s ownership stake and governance role in his company for the first time. The lesson is clear: All companies with international investors must be ready for the heightened scrutiny sure to follow Uber’s and the NBA’s reputational storms. Let the message development and media training begin!
Fortunately, I never had a second meeting with my soft-spoken lunchmate. His company decided to slow down its expansion plans while it developed non-lethal loan-collection protocols. Good decision.