[kcsavvy]

I have heard of many startups bringing early customers onto their advisory board - it seems like a relatively common practice. I am curious what makes this fraud? The timing? Or the fact that the Netflix VP did not disclose this to His employer?

[prasadjoglekar]

Kali didn't go on to the advisory board on behalf of Netflix - that would be perfectly rational.

Instead, the startup had to do 2 deals: One with Kali directly for "advice", and then a second with Netflix that Kali, in his capacity as a VP there, would sign.

Besides being unethical; this is now a clear conflict of interest. Netflix (and shareholders of Netflix by extension) may have signed up for a crappy product from the startup only because startup had a side deal with Kali.

[lobocinza]

I'm not knowledgeable at all in this matter but the issues here are clear at least to me. Let's forget the conflict of interests he would face when working for both companies. He was charged with bribery, the issue here is that hiring him as a paid consultant was put as a condition for the contract approval. A deal which would benefit exclusively him and not his employer. Quite literally the companies were paying to receive lucrative contracts.