Elon Musk found a new reason to walk away from buying Twitter. This time it's a huge severance package the company paid to a former executive who recently accused it of serious security flaws.
In a letter sent Friday afternoon by Musk's legal counsel to
Twitter's chief legal officer Vijaya Gadde, the billionaire took issue with a
$7.75 million payment in late June to Peiter Zatko, better known as
"Mudge," after he was let go from the company.
Lawyers for Musk argued the payment is a breach of the $44
billion merger agreement signed back in April. Twitter promised in the deal not
to "provide any severance or termination payments or benefits to any
Company Service Provider," the attorneys wrote in the letter, while noting
that the definition of a "Company Service Provider" includes former
Twitter employees.
This marks the third "notice of termination" of
the merger agreement sent by Musk to Twitter. The first was sent in early July,
claiming that Musk had the right to cancel the deal because Twitter's allegedly
withheld requested data and information regarding the number of
"bots" or spam accounts on the platform. The second was in August,
pointing to Zatko's whistleblower disclosure as a new basis for Musk to call
off the acquisition. Broadly speaking, Musk is accusing Twitter of
"fraud" by misleading him on its business and monetization
capabilities, as well as public investors and the SEC.
"Although the Musk parties believe this termination
notice is not legally necessary to terminate the merger agreement because they
have already validly terminated it... the Musk parties are delivering this
additional termination notice in the event that [earlier notices are]
determined to be invalid for any reason," the letter adds.
Representatives for Twitter could not be immediately reached
for comment. The company has repeatedly stood by its existing disclosures about
bots on its service.
Musk has leapt on Zatko's whistleblower disclosure, made
public in August, as he fights in Delaware Chancery Court to walk away from his
agreement to buy Twitter at no cost.
Twitter sued Musk in July, saying he is legally bound to
purchase the company for $44 billion and Musk's true reason for backing out was
worry over his personal fortune being affected by a downward turn in financial
markets. The company also recently claimed that Musk's personal texts show he
was thinking about getting out of the deal in early May, just a few weeks after
he agreed to buy it.
As for Zatko, a hacker turned security expert, he spent only
a year working at Twitter. The company claims he was fired earlier this year
for performance issues and that all of the concerns he raised about security
were investigated when he was still with the company.
Zatko's lengthy disclosure to Congress claimed Twitter
suffers from unchecked and "egregious" security flaws that he was
told to withhold or temper the seriousness of in presentations to the company's
board. He also claimed Twitter "lied" to Musk about its measuring of
"bot" accounts. Twitter called Zatko's disclosure
"opportunistic" and an obvious attempt to harm the company.
While Twitter employees told Insider they are suspicious of
Zatko's motivations, some of his claims struck a chord with current Twitter
workers.
Twitter's lawsuit against Musk is headed to a five-day trial
in early October.
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