Two groups of Facebook shareholders who sued the company claim that members of the board of directors paid five billion dollars to the Federal Trade Commission (FTC) so that both its CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg would not be named or called to testify in the Cambridge Analytica lawsuit.
The lawsuit, whose documents were made public on Tuesday, Sept. 21, and Politico accessed, was filed on July 16, 2021, against Mark Zuckerberg, Sheryl Sandberg, other executives, and Facebook.
In it, two shareholder groups, the Employee’s Retirement System of Rhode Island and City of Warwick System of Retirement, allege that the board offered to pay $5 billion to the Federal Trade Commission in exchange for removing Zuckerberg and Sandberg’s name from a major lawsuit against Facebook for violating the privacy of millions of users.
The conditions also included not calling them to testify.
“Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC’s complaint, made subject to personal liability, or even required to sit for a deposition,” one of the lawsuits reads.
Cambridge Analytica scandal
In March 2018, an employee of Cambridge Analytica, a company dedicated to analyzing political data, denounced that the company had collected, through an application, data from more than 87 million Facebook users to sell them to its clients seeking to conduct political campaigns targeting people with specific profiles.
Cambridge Analytica at the time was a Facebook partner, and according to the former employee who blew the whistle, the data came from a personality questionnaire for which some 270,000 people were paid. The questionnaire—”thisisyourdigitallife”—in turn, extracted data from their friends’ profiles, creating a massive database.
With that data, a Russian psychology professor at Cambridge University created user profiles to sell.
Trump hired Cambridge Analytica in June 2016 as part of his presidential campaign.
Facebook was implicated in the scandal because its users’ personal and private information was collected without their authorization or consent.
In its defense, Facebook said that users entered their information knowingly, that no passwords or sensitive information were breached.
Because of the massive security breach, the FTC sued Facebook, its CEO Zuckerberg, and COO Cheryl Sandberg. The original fine was $106 million, but the company’s board of directors offered the sum of five billion in exchange for ‘immunity’ for Mark Zuckerberg and Ms. Sandberg.
“The Board has never provided a serious check on Zuckerberg’s unfettered authority,” one set of shareholders said. “Instead, it has enabled him, defended him, and paid billions of dollars from Facebook’s corporate coffers to make his problems go away,” said one of the shareholder groups.
They also allege that both Zuckerberg and Sandberg refused to be interviewed by PricewaterhouseCoopers (PwC), the firm hired to audit Facebook’s privacy compliance as part of a 2012 settlement with the FTC, allowed other executives to make false statements about the company’s practices, and never provided the board with copies of PwC’s audits.
In April 2018, Zuckerberg appeared before Congress for questioning over the Cambridge Analytica scandal and said they were unaware that the political data analytics firm was collecting personal information from its users.