A former venture capitalist with the healthcare operation at Siemens (NYSE:SI) sued the company last year, alleging that he was fired in retaliation for blowing the whistle on an alleged extortion attempt.
Andrew Jay’s 14-year tenure in the German industrial conglomerate’s Boston venture shop ended in November 2017, when he declined to accept a demotion he alleges was made after he told the Siemens compliance department of a contractor’s alleged attempt to strong-arm a startup company Siemens was considering for an investment.
Formerly a managing partner and VP, Jay’s team in the summer of 2016 paid a visit to molecular diagnostics company Base4 to gauge its suitability for investment, according to Jay’s Dec. 27, 2017 complaint filed in Massachusetts’ Suffolk Superior Court. But the team decided it was too early to invest in Base4 and passed that recommendation up the ladder.
The following spring, the contractor – Thomas Miller of GreyBird Investments, a former Siemens executive with a contract to provide dealflow to its VC shop – pitched Base4 as a potential investment, according to the lawsuit, which was removed to the U.S. District Court for Massachusetts last month. Miller’s contract was arranged by then-Siemens Healthcare CEO Bernd Montag and head of strategy David Stein, whose deputy Mary Amor also backed the proposed Base4 investment, according to Jay’s complaint.
Jay then sent a pair of his own deputies to take a another look at Base4’s microdroplet technology, but again recommended against investing after reaching the same conclusion, according to the complaint. But in July 2017 he allegedly received a call from Base4 CEO Cameron Frayling about Frayling’s contact with Miller.
“Mr. Frayling informed [Jay] that Miller had represented to Base4 that Siemens Healthcare would invest if Miller told them to, that Siemens Healthcare would not invest if Miller told them not to, and that he should sign the proposed term sheet with GreyBird if he wanted to see any funding from Siemens Healthcare,” the lawsuit alleges.
After discussion with his team, Jay informed Siemens Healthcare’s compliance department about Frayling’s call. Although Amor allegedly later told Jay that Miller’s contract was not renewed, despite Siemens executive’s satisfaction with its value, the lawsuit claims that Stein continued to push for a Base4 investment which Siemens allegedly eventually made; Base4 reported a $6.5 million round in November 2017.
For Jay, the lawsuit alleges, that meant a demotion based on the alleged pretext that his demeanor during presentations was a problem.
In August 2017, Stein and Montag “acted in concert to concoct a pretextual reason to demote plaintiff, remove many of his job duties, and replace him with an outside hire, all in retaliation for plaintiff’s compliance report,” the lawsuit alleges.
Jay declined the promotion and left Siemens Nov. 6, 2017, according to the complaint. He’s seeking compensatory and punitive damages; Siemens filed notice Feb. 26 of its intent to move dismissal on failure to state a claim, according to court documents.