Former Uber CEO Travis Kalanick sued by early investor Benchmark Capital over fraud allegations

Uber founder Travis Kalanick. Photo: Money Sharma / AFP / Getty Images

An early Uber investor, Benchmark Capital, is suing former Uber CEO Travis Kalanick over claims he committed fraud in 2016, according to a lawsuit filed on Thursday in Delaware Chancery Court.

The suit centres on the creation of three additional board seats at Uber in June 2016. At the time, Kalanick inserted a provision that gave him the “absolute right” to select three directors to fill the seats. Kalanick selected himself to fill one of the seats after he resigned as CEO a year later.

Benchmark Capital is saying it would never have approved the board expansion had it been aware of the controversy surrounding Kalanick and of Uber’s cultural problems, accusing the former CEO of mismanagement and packing the board with supporters.

Axios’ Dan Primack was first to report the news on Thursday.

Benchmark Capital is now calling for Kalanick’s removal from Uber’s board. In 2011, the venture-capital firm, which has a seat on Uber’s board, led an $US11 million Series A investment in the company.

“In 2016, Kalanick fraudulently obtained control of three newly created seats on Uber’s Board by his material misstatements and fraudulent concealment from Benchmark of material information that would have led Benchmark to reject the creation of the seats,” Benchmark Capital wrote in its complaint.

A representative for Kalanick wrote in a statement that the lawsuit was “without merit and riddled with lies and false allegations.” The statement continued:

“This is continued evidence of Benchmark acting in its own best interests contrary to the interests of Uber, its employees, and its other shareholders. Benchmark’s lawsuit is a transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder and to silence his voice regarding the management of the company he helped create. Travis will continue to act in the interests of Uber and all of its stakeholders and is confident that these entirely baseless claims will be rejected.”

The suit claims Kalanick induced Benchmark to approve the board expansion to benefit himself and that he “intentionally concealed and failed to disclose his gross mismanagement and other misconduct at Uber.”

Uber has been in the spotlight after reports of pervasive gender discrimination and sexual harassment at the company. The ride-hailing giant is also being sued by Waymo, Google’s sister company, over claims it stole intellectual property to advance its autonomous-car development.

Five of Uber’s major investors forced Kalanick to step down in late June. Benchmark was reportedly one of the loudest voices calling for his removal.

You can read Benchmark Capital’s full complaint below: