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A New Letter in Uber’s Courtroom Fight Against Alphabet’s Waymo Raises Questions About a Cover-Up

November 29, 2017, 6:55 PM UTC

Uber Technologies’s former chief executive and some board members knew of a letter a U.S. judge has said was withheld from a high-stakes lawsuit, an attorney for the company testified on Wednesday.

But Uber’s lawyer said she did not disclose the letter to other attorneys defending the company in the trade secrets lawsuit by Alphabet’s self-driving car unit Waymo.

U.S. District Judge William Alsup called that decision “inexplicable.” The letter alleges Uber trained employees to steal trade secrets and hide their activities.

“On the surface it looks like you covered this up,” he told Uber in court.

Alphabet’s Waymo has accused Uber of stealing confidential information about its self-driving car designs, the highest-stakes legal challenge on a list of litigation that Uber’s new CEO Dara Khosrowshahi inherited when he joined the company in August.

Uber’s autonomous car program has been hobbled by the case and it faces hefty claims from Alphabet (GOOGL). U.S. prosecutors also are investigating the matter, raising the possibility of criminal charges.

Uber has denied that it used Waymo trade secrets in its autonomous vehicle program.

At the hearing in San Francisco federal court, Uber in-house attorney Angela Padilla testified she did not disclose the letter with the allegations to Uber attorneys and an outside law firm that were defining Uber in the Waymo lawsuit.

Alsup, who is overseeing the case, raised the question of a cover-up as he also did at a hearing on Tuesday.

“There was no effort to cover this up,” Padilla responded, adding that she takes “full responsibility” for not circulating the letter more widely.

The hearing was still ongoing on Wednesday.

Related: Uber Says Nearly 3 Million Accounts in the U.K. Alone Were Affected in the 2016 Data Breach

Former Uber security analyst Richard Jacobs testified in court this week that his lawyer sent a 37-page letter to Padilla describing an organization within Uber called marketplace analytics that he said exists for the purpose of acquiring trade secrets, code base and competitive intelligence.

Jacobs’ attorney sent the U.S. Department of Justice a similar letter making the same claims.

In his testimony Jacobs described an elaborate intelligence operation inside Uber to deliberately research competitors and gather data about them, and use technology to avoid a paper trail.

Alsup delayed the trial, which had been scheduled for next week, to give Waymo more time to investigate the allegations.

In court on Wednesday, Padilla said Uber viewed the Jacobs letter as a tactic by a disgruntled former employee to secure money from the company.

Related: Uber’s Q3 Loss Widens as SoftBank Makes First Offer on Shares

However, Uber eventually settled the matter by paying Jacobs $4.5 million, including a consulting contract, and a further $3 million to his lawyer.

“That is a lot of money,” Alsup said. “And people don’t pay that kind of money for BS. And you certainly don’t hire them as consultants if you think everything they’ve got to contribute is BS.”