|Thu Feb 27 2014 13:18:52|
eBay Chairman Pierre Omidyar Bolsters Icahn Argument
By: Ina Steiner
In trying to get eBay to spinoff PayPal and gain two board seats, Carl Icahn accuses Marc Andreessen of having a conflict of interest in gaining access to non-public information as an eBay board member while investing in and actively advising at least five direct competitors of PayPal, including Boku (mobile payments platform), Coinbase (Bitcoin wallet), Dwolla (secure online money management), Jumio (online and mobile credit card payments) and Fab (design e-commerce). He also claims Intuit's Scott Cook has a conflict of interest, asking, "How can the (eBay) board have a conversation about the strategy or performance of PayPal when a representative of a direct competitor who has so much at stake is in the room?"
Today, eBay founder and chairman of the eBay Board of Directors Pierre Omidyar issued a statement defending the board, but he, of all people, understands that board members may share confidential information with competitors.
During the eBay v Craigslist corporate governance trial at which Omidyar himself testified, eBay's representatives on Craigslist's Board of Directors admitted using confidential Craigslist data to launch eBay's own competing classifieds site. In fact, the reason eBay sued Craigslist was because the latter diluted its shares in order to get eBay off its board.
Meg Whitman and Pierre Omidyar said they believed eBay had a duty with regards to confidential information provided by Craigslist as part of its stake in the company, but they said they did not check to see what eBay was specifically doing to protect that information.
Omidyar wrote in in his statement today, "Throughout the board's process of divesting Skype, Marc Andreessen recused himself from all deliberations on the transaction, including all discussions, negotiations, and decisions. eBay and its shareholders benefitted from the divestiture of Skype and its ultimate sale to Microsoft. The transactions were widely seen as a superb outcome for the company."
But Omidyar doesn't address the fact that Andreessen was privy to eBay's thoughts on Skype prior to and as he put together an investor coalition to buy Skype that included his own firm.
Carl Icahn has asked, "How can Mr. Donahoe and the eBay Board allow Mr. Andreessen to advise these competitors while he simultaneously possesses not only nonpublic eBay Board information but also intimate proprietary information about PayPal's operations? But perhaps more importantly, how can Mr. Andreessen be trusted to objectively advise Mr. Donahoe and the eBay Board about the strategic direction of PayPal when he has vested interest in so many of its competitors?"
eBay responded, "Because Mr. Andreessen's fund had a small stake in the acquiring group, Mr. Andreessen was recused from all decision making." So presumably Andreessen was privy to all non-public information about Skype leading up to the offer.
The question must be asked - if Andreessen had to be recused from Skype decision-making process, why didn't he also exclude his own company from participating in the purchase of Skype? And, why is Icahn the one asking this question rather than eBay's own board or the financial press at the time of the sale?