Twitter’s ex-chief executive Parag Agrawal and two other former executives are suing the Elon Musk-owned social media platform for failing to cover more than $1mn in personal legal expenses, including those related to an investigation by the US Department of Justice.
Agrawal, Twitter’s former general counsel Vijaya Gadde, and Ned Segal, former chief financial officer, were fired by Musk when he acquired the platform for $44bn in October.
The trio claims that the company has “refused to acknowledge its obligations and to remit payment of any invoices”, after they incurred “significant expenses” responding to lawsuits and investigations related to their former positions.
According to documents filed in Delaware chancery court, the justice department contacted counsel for Agrawal and Segal “regarding certain investigations related to the company.”
It is unclear what the probes were related to or if they remain ongoing. The DoJ did not immediately respond to a request for comment.
The lawsuit alleges that Agrawal and Segal have also incurred legal expenses in relation to 2022 inquiries by the US Securities and Exchanges Commission. The SEC has been investigating whether Musk breached securities regulations by failing to make timely disclosures when he initially purchased a 9.2 percent stake in the company early last year.
Companies often cover the legal charges of executives related to their official positions.
Musk has led an aggressive cost-cutting effort at Twitter to wrestle its finances under control. Advertisers have pulled back spending on the platform, and the company is on the hook for $1.5bn of annual interest payments on $13bn of debt Musk used to fund the acquisition.
As well as having conducted mass job cuts, Twitter is either negotiating with or refusing to immediately pay some of its vendors, landlords, and partners, exposing the company to legal challenges. For example, Twitter is being sued by its San Francisco landlord for not paying rent.
By terminating Agrawal, Segal, and Gadde “for cause” last year, Musk voided the large severance payouts they were expected to receive — nearly $60 million in Agrawal’s case. It is unclear if the executives plan to challenge the terms of their terminations in court.
Monday’s lawsuit details Twitter’s various legal and regulatory woes since Musk first made his bid to take over the company. On top of the SEC and DoJ inquiries, the executives have been named in a class-action lawsuit against the company. At the same time, Gadde testified before the House Committee on Oversight and Accountability at a hearing in February into content moderation on the platform.
Separately, Twitter has faced demands from the Federal Trade Commission since the acquisition to share internal communications related to Musk and to its business practices, according to a report by the Republican-led House Judiciary Committee.