Netflix, Inc. Sues Former Exec (Now Yahoo CIO) Alleging Kickbacks

Netflix, Inc. Sues Former Exec (Now Yahoo CIO) Alleging Kickbacks
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Netflix, Inc. (NASDAQ:NFLX) has sued a former executive accusing him of collecting kickbacks from the vendors that he made while he was working the streaming firm, says a report from Recode. Kail was working as the vice president of information technology operations at Netflix, and is currently working with Yahoo as the Chief Information Officer (CIO).

Kail took advantage of his position

Kail joined Netflix in 2011, and arranged contracts for IT service companies Vistara and NetEnrich. However, Netflix claims that Kail earned 12% to 15% commission on the amount that Netflix paid to these vendors. Mike Kail has been accused of fraud, breaching fiduciary duties and other charges by Netflix in a suit filed by it in a California state court on Monday. Yahoo announced in August that Mike Kail will be its next CIO, and would report to CEO Merissa Mayer.

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A total of $3.7 million was paid by Netflix to both the companies from 2012 till Kail departed, and commission charged by him would have amounted to $450,000 to $560,000. The lawsuit claims that Kail controls a consulting company ‘Unix Mercenary,’ and these collections were funneled through this firm. All the payments made to the vendors were approved by Kail only, said Netflix.

Netflix have proof

An internal investigation was conducted by the company during which it unearthed few emails, and those have been used by it for filing a complaint. They clearly depict that Kail had always ensured that special treatments were given to the additional commissions and had gone to lengths for doing so.

Netflix, based in Los Altos, said in the suit, “We have found emails that allegedly indicate that on information and belief, after Kail approved invoice payments by Netflix to NetEnrich and Vistara for various contracted products and/or services, [the companies] paid the false “agent” company directly.”

In a March email to NetenRich, Kail allegedly referred to a payment made to Unix Mercenary, saying “Received, but it was sent to Netflix, not my home address. Please always use the latter.”

Kail is suspected of receiving payments from the other companies as well with whom Netflix worked during Kail’s stint. It says the benefits availed by Kail could include a host of things including stock and/or gift cards. Vistara and NetEnrich are still to comment on the matter.

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