Sen. Elizabeth Warren (D-MA) has despatched a letter to Tesla’s board that accuses CEO Elon Musk of “unavoidable conflicts,” and potential “misappropriation of company belongings” associated to his $44 billion acquisition of Twitter.
Warren expressed concern over how Tesla’s board is coping with Musk since changing into Twitter’s CEO, claiming that his actions will not be within the “greatest pursuits” of Tesla and its shareholders. It’s the board’s “obligation” to handle the scenario, she mentioned.
“That accountability contains guaranteeing that Mr. Musk is an efficient CEO and that he fulfills his authorized obligation to behave in one of the best pursuits of Tesla and all of its shareholders, not simply himself,” she wrote in a letter to Tesla chair Robyn Denholm, on Sunday.
Within the first weeks of his Twitter takeover, Musk’s management prompted issues over whether or not he’s “funneling Tesla assets into Twitter,” Warren wrote, citing studies that declare Musk used Tesla software program engineers at Twitter.
It raises questions on whether or not Mr. Musk is “appropriating assets from a publicly traded agency, Tesla, to profit his personal personal firm, Twitter,” Warren wrote. Doing so would “violate” Musk’s authorized responsibility to Tesla and immediate questions in regards to the board’s competence, she mentioned.
Warren talked about an nameless worker who informed CNBC that it felt nearly not possible to show down Musk with out dealing with penalties later. That raises a bigger query of whether or not workers had been pressured to work for Twitter reasonably than being invited to take action, Warren mentioned.
Since Musk’s Twitter acquisition, a number of advertisers have pulled their advertisements from Twitter, resulting in a drop in income. Warren mentioned that “Twitter’s desperation for income to cowl its new money owed may additionally create conflicts.”
For instance, Musk may “shift Twitter algorithms in order that reward of Tesla merchandise obtain higher consideration and criticism of Tesla merchandise will probably be suppressed.” He may even have Twitter present free advertisements to Tesla, or it may overcharge Tesla for promoting. Both manner, Warren says it’s a battle of curiosity.
Musk and Tesla are “inextricably intertwined,” Warren mentioned, which suggests his actions as Twitter’s CEO, and the way Twitter is operated and perceived, may hurt Tesla’s model.
This yr, Tesla shares have dropped greater than 62%, partly due to rising concern amongst traders about Musk’s buy of Twitter and his concentrate on that firm at Tesla’s expense.
“Tesla’s losses didn’t happen in a vacuum: whereas not all losses could be attributed to Mr. Musk’s resolution to take over Twitter, there seems to be a direct hyperlink, with one analyst calling the Twitter deal an “albatross” that hangs over Tesla,” Warren wrote.
She additionally included a dozen questions for the board about any casual or formal agreements between Tesla and Twitter. Moreover, she requested about any protections the board has in place to keep away from conflicts of curiosity involving Musk, and if it has reviewed Musk’s actions associated to the 2 corporations.
“Regardless of widespread issues about Mr. Musk’s acquisition of Twitter whereas serving as CEO of Tesla, it stays unclear whether or not the Tesla Board—which has key resolution making authority throughout the firm—is satisfactorily governing the corporate or if it has established clear guidelines and insurance policies to handle the dangers to Tesla posed by Mr. Musk’s twin roles,” Warren wrote.
Musk, Tesla, and Twitter didn’t instantly reply to Fortune’s request for remark.
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