Further complications in the Musk-Twitter deal as former head of security allegedly made to destroy evidence
The twists and turns of the Twitter acquisition by Elon Musk continue to unfold even now after the deal looks ready to close. From Musk initially secretly acquiring major stock in Twitter – to being offered a seat on the board, which he turned down when it was revealed that it would limit the stake he could hold in the social media company – to Twitter adopting a 'poison pill' to prevent the Tesla CEO from acquiring too large a stake, to the board then turning around and accepting Musk's offer, it's been a rollercoaster. The South African-born entrepreneur then got cold feet and backed out of the deal due to what he believed was a misrepresentation of the number of bots on the platform. Twitter then took Musk to court in order to get him to complete the arranged deal. Twitter's former head of security Peiter Zatko also made a whistleblower complaint against the company for security failings. Twitter and Zatko eventually reached a settlement, but now Musk is claiming that Twitter ordered their head of security to destroy all evidence in the settlement. Musk is also being sued by a Twitter investor for flip-flopping in the deal. More in these articles from Bloomberg. – Ross Sinclair
Musk Claims Twitter Ordered Whistle-Blower to Destroy Evidence
By Jef Feeley
(Bloomberg) – Just before Elon Musk revived his proposal to buy Twitter Inc. last week, the billionaire accused the company of ordering a whistle-blower to destroy evidence of its missteps as part of a $7.8 million severance package.
Peiter Zatko, Twitter's ex-head of security, said he burned 10 handwritten notebooks and deleted 100 computer files at the behest of company managers as part of his separation agreement, according to Oct. 3 court filings that were unsealed Monday. The books contained notes of the whistle-blower's meetings with company counterparts during his year-long tenure as security chief, the filings show.
Zatko has been at the center of Musk's arguments that Twitter misled him about a raft of operational problems at the social-media platform — which justified walking away from the $44 billion buyout. The billionaire then reversed course last week and agreed to buy the company for the original $54.20-per-share price.
"Twitter's attempt to buy Mr. Zatko's silence failed, but Twitter achieved its secondary aim of ensuring Mr. Zatko's corroborating evidence would never come to light," Musk's lawyers said in the unsealed filing.
Twitter didn't immediately respond to a request for comment on the filing, which is part of the Twitter lawsuit to force Musk to consummate the buyout that has since been paused.
Delaware Chancery Judge Kathaleen St. J. McCormick put the case on hold and set an Oct. 28 deadline for Musk and Twitter to complete the deal. Musk's lawyers are asking McCormick to sanction Twitter's attorneys for ordering the destruction of potential evidence in the case.
Zatko created a stir in Washington when he testified to the Senate Judiciary Committee last month that Twitter's lax approach to computer security threatened US national security.
Twitter has said it fired Zatko in January for poor performance and said he gave "a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context."
Zatko contends he warned Twitter CEO Parag Agrawal about serious computer security issues and privacy concerns tied to the social-media platform's operations that amounted to violations of settlements the company reached with government regulators. He also said his Twitter colleagues showed little interest in doing a deep dive into the issue of how many spam and robot accounts were included among the company's more than 230 million users.
Musk's lawyers accused Twitter's top two lawyers, Vijaya Gadde and Sean Edgett, and Chief Privacy Officer Damien Kieran, along with Agrawal, of seeking to cover up the violations of the legal settlements by ordering Zatko to destroy his documents.
The document-destruction order deprived Musk's legal team of "critical corroborating evidence of Mr. Zatko's allegations, which would support his account of key meetings and conversations relevant to this case," according to the unsealed filing.
Meanwhile, Twitter complained in its own unsealed filing that Jared Birchall — Musk's top aide — showed up to his Sept. 21 pre-trial deposition in the case unprepared to answer questions about a host of issues related to the transaction.
"Throughout the deposition, Birchall unequivocally conceded both his lack of knowledge and his lack of preparation — on topic after topic," Twitter's legal team said in the filing. Birchall runs Musk's family office and was deeply involved in the negotiations over the buyout of the social-media platform.
Twitter's lawyers said Birchall had little or no information about his communications with government regulators about the deal, the hiring of data scientists to review the number of spam or robot accounts embedded in Twitter's customer base or the Musk side's efforts to retrieve relevant messages about the transaction.
A spokesman for Musk's lawyers didn't immediately respond Monday to a request for comment about Twitter's complaints about Birchall's deposition performance.
The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington).
(Updates with date of original filings in second paragraph)
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Musk Sued by Twitter Investor Over 'Fraudulent' Buyout Flip-Flop
By Robert Burnson
Elon Musk was sued by a Twitter Inc. investor who says the world's richest person's on-again off-again purchase of the social-media platform and his public attacks on the company were designed to manipulate its stock price.
Giuseppe Pampena says that when Musk agreed last week to go ahead with his purchase of Twitter, at the originally agreed upon price, he "essentially acknowledged that he had been bluffing all along" about backing out of the deal.
The flip-flops and Musk's accusations about Twitter sunk its stock price, hurting investors while all the while improving Musk's bargaining position, according to the securities class-action complaint filed Monday in federal court in San Francisco.
Musk offered to buy Twitter in April for $54.20 per share, or $44 billion, but then announced his was pulling out of the deal three weeks later.
Then, "Musk proceeded to make statements, send tweets, and engage in conduct designed to create doubt about the deal and drive Twitter's stock down substantially in order to create leverage that Musk hoped to use to either back out of the purchase or re-negotiate the buyout price by as much as 25% which, if accomplished, would result in an $11 billion reduction in the buyout consideration," according to the suit. "Musk's conduct was fraudulent and illegal."
Representatives of Quinn Emanuel Urquhart & Sullivan LLP, the law firm that represents Musk in several legal matters including the Twitter buyout, didn't immediately respond outside regular business hours to a request for comment.
The case is Pampena v. Musk, 22-cv-05937, U.S. District Court, Northern District of California (San Francisco).
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