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Netflix Sues a Former Exec -- Now Yahoo's CIO -- For Allegedly Collecting Kickbacks

The streaming video company says the former VP may have pocketed more than $500,000 in "commissions" from Netflix vendors.

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Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Netflix says a former executive collected kickbacks from vendors he helped connect to the streaming video company.

Now Netflix is suing its former employee, who is currently Yahoo’s chief information officer.

Netflix filed suit in California state court on Monday, accusing Mike Kail, its former vice president of information technology operations, of fraud, breaching his fiduciary duties and other charges.

Kail left Netflix in August of this year, the same month Yahoo announced that he was going to be its CIO, reporting to CEO Marissa Mayer.

The Netflix suit says Kail, who joined the company in 2011, arranged Netflix contracts with IT service companies Vistara and NetEnrich, and then pocketed commissions of 12 percent to 15 percent of the monthly fees Netflix paid each company.

Netflix says it paid the two companies a total of $3.7 million from 2012 until Kail’s departure, which would mean he could have collected between $450,000 and $560,000. The suit says he funneled the payments to “Unix Mercenary,” a consulting company he controls. Netflix said Kail approved all payments made to vendors.

Vistara and NetEnrich are both run by Raju Chekuri; a spokesperson for the two companies, who said they had no comment on the suit, says Vistara was spun out of NetEnrich.

Netflix’s suit says the company believes Kail received payments from other companies that worked with Netflix during his tenure; Netflix thinks “such benefits may have included, among other things, stock and/or gift cards.”

I’ve asked Kail and Yahoo for comment. Netflix declined to comment.

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