Senator Elizabeth Warren (D-MA) has sent a letter to the Tesla board accusing CEO Elon Musk of “inevitable conflict” and possible “misappropriation of company assets” in connection with his $44 billion acquisition of Twitter.
Warren expressed concern about how Tesla’s board is handling Musk since becoming CEO of Twitter, claiming that his actions may not be in the “best interests” of Tesla and its shareholders. It is the board’s “legal responsibility” to address the situation, she said.
“That responsibility includes ensuring that Mr. Musk is an effective CEO and that he meets his legal obligation to act in the best interests of Tesla and all of its shareholders, not just himself,” she wrote in a letter. to Tesla Chairman Robyn Denholm, on Sunday.
In the early weeks of his Twitter takeover, Musk’s leadership raised concerns about whether he was “funneling Tesla resources to Twitter,” Warren wrote, citing reports that Musk used Tesla software engineers at Twitter.
It raises questions about whether Mr. Musk is “appropriating resources from a public company, Tesla, for the benefit of his own private company, Twitter,” Warren wrote. This would “violate” Musk’s legal duty to Tesla and raise questions about the board’s competence, she said.
Warren mentioned an anonymous employee who told CNBC that it felt almost impossible to turn Musk down without facing consequences later. That raises a bigger question of whether employees were forced to work for Twitter instead of being invited to do so, Warren said.
Since Musk’s acquisition of Twitter, multiple advertisers have pulled their ads from Twitter, leading to a drop in revenue. Warren said that “Twitter’s desperation for revenue to cover its new debts could also spark conflict.”
For example, Musk could “shift Twitter algorithms so that praise of Tesla products gets more attention and criticism of Tesla products is suppressed.” He could also have Twitter provide ads to Tesla for free, or it could overcharge Tesla for ads. Either way, Warren says it’s a conflict of interest.
Musk and Tesla are “inseparable,” Warren said, meaning his actions as CEO of Twitter and the way Twitter is managed and perceived could hurt Tesla’s brand.
Shares of Tesla are down more than 62% this year, partly due to rising investor concerns about Musk’s purchase of Twitter and his focus on that company at Tesla’s expense.
Tesla’s losses did not happen in a vacuum: While not all of the losses can be attributed to Mr Musk’s decision to acquire Twitter, there appears to be a direct link, with one analyst calling the Twitter deal an “albatross” hanging over Tesla. Warren wrote.
She also added a dozen questions to the board about any informal or formal agreements between Tesla and Twitter. In addition, she asked about any safeguards the board has taken to prevent conflicts of interest involving Musk, and whether it has reviewed Musk’s actions with regard to the two companies.
“Despite widespread concerns about Mr. Musk’s acquisition of Twitter while he was CEO of Tesla, it remains unclear whether Tesla’s board of directors — which has the primary decision-making authority within the company — is adequately governing the company or whether it has clear rules and regulations. formulated policy. to address the risks to Tesla created by Mr. Musk’s dual role,” Warren wrote.
Musk, Tesla and Twitter did not immediately respond Fortune request for comment.
This story was originally on Fortune.com
More from Fortune:
People who have skipped their COVID vaccination are at a higher risk of road accidents
Elon Musk says being booed by fans of Dave Chapelle was ‘a first for me in real life’, suggesting he is aware of building backlash
Generation Z and young millennials have found a new way to afford luxury handbags and watches by living with mom and dad
The real sin of Meghan Markle that the British public can’t forgive — and Americans can’t understand