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The first sentence of the second paragraph says: "There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT op

The first sentence of the second paragraph says: "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." That seems pretty clear to me.

earthscienceman 5y ago
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.
- tptacek 5y ago
  You can't "hire" Netflix's VP of IT to stay at Netflix and approve all your purchase orders.
- ghaff 5y ago
  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).
- SamoyedFurFluff 5y ago
  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?
- groby_b 5y ago
  "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.
  - ghaff 5y ago
    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.
  - poizan42 5y ago
    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.
    - groby_b 5y ago
      It is right in the subhed? "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.
- geofft 5y ago
  Michael Kail worked for Netflix as VP of IT ops. Netskope wanted Netflix to be a customer. 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.
- dboreham 5y ago
  He was playing both sides of the deal : acting for Netflix in selecting a vendor, while simultaneously acting as a paid consultant to the vendor. Conflict of interest. Netflix is defrauded because they could have selected a lower cost vendor, or developed the service in-house.
- NikolaNovak 5y ago
  The way I see it: - 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.
- cmckn 5y ago
  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.
- nitrogen 5y ago
  The movie The Informant! illustrates how this kind of thing might happen.
- TheMagicHorsey 5y ago
  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.
hardtke 5y ago
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.

earthscienceman 5y ago

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.

tptacek 5y ago
You can't "hire" Netflix's VP of IT to stay at Netflix and approve all your purchase orders.
ghaff 5y ago
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).
SamoyedFurFluff 5y ago
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?
groby_b 5y ago
"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.
- ghaff 5y ago
  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.
- poizan42 5y ago
  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.
  - groby_b 5y ago
    It is right in the subhed? "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.
geofft 5y ago
Michael Kail worked for Netflix as VP of IT ops. Netskope wanted Netflix to be a customer. 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.
dboreham 5y ago
He was playing both sides of the deal : acting for Netflix in selecting a vendor, while simultaneously acting as a paid consultant to the vendor. Conflict of interest. Netflix is defrauded because they could have selected a lower cost vendor, or developed the service in-house.
NikolaNovak 5y ago
The way I see it: - 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.
cmckn 5y ago
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.
nitrogen 5y ago
The movie The Informant! illustrates how this kind of thing might happen.
TheMagicHorsey 5y ago
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.

hardtke 5y ago

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.