Beam Fallout Continues After Whistleblower’s Revelations
On the weekend of Saturday 24th August, a story about micromobility was splashed across the front page of the Weekend Australian newspaper under the headline, “‘Running Hot Project’: e-scooter firm Beam accused of audacious scam”
The first section of this article will republish a large section of that original article published by the Weekend Australian, then after the subhead “Subsequent Fallout” well include further news including a statement that we most recently requested and received from Beam.
Excerpts from the Weekend Australian
Global e-vehicle company Beam Mobility has allegedly put “phantom” scooters on streets in Australia and New Zealand to cheat governments out of potentially hundreds of thousands of dollars in fees and subvert safety caps.
The fast-growing, Singapore-based operator is under investigation by at least five local governments, including Brisbane, Auckland and Canberra, for manipulating monitoring technology to exceed caps on the number of scooters and bikes allowed.
For the right to be licensed in a city, e-scooter companies are supposed to pay registration fees on each vehicle and/or a percentage of a fare paid by riders.
The local governments are investigating allegations Beam deliberately went over the cap of scooters – in some places by as much as 30 per cent – depriving them of potentially thousands of dollars per day in lost revenue.
In an extraordinary statement to The Weekend Australian on Friday night, Beam Mobility chief executive Alan Jiang said the company was “deeply apologetic” for exceeding vehicle allocations but insisted it was unintentional and “emphatically reject(ed) any suggestion that this was a ‘scheme’ to deprive councils of revenue”.
A whistleblower, who declined to be named, said Beam had deliberately “cooked up” the scheme to get “an additional 1500 vehicles over cap” to generate thousands of dollars in extra revenue per day.
The Weekend Australian obtained a cache of emails and internal messages from the company’s “war-room”, Slack chat, exchanged by senior executives including its two Yale University graduate founders, and reveals the inner-workings of the scheme, internally dubbed the “Running Hot Project” which allegedly delivers fake, real-time data to an independent monitoring app that tracks the numbers of vehicles and trips.
The monitoring app, Ride Report, has also confirmed it is investigating the allegations against Beam. It has already reviewed historical data in the affected cities to “quickly identify patterns within the data that are consistent with the concerns” raised by The Weekend Australian.
Established in 2018, Beam operates in more than 60 cities globally, with booming market shares in Turkey, Japan, Indonesia, Malaysia, Thailand and South Korea.
Their scooters and bikes were in 37 locations in Australia and New Zealand, including Sydney, Perth, Darwin, Adelaide, Cairns, Townsville, Hobart and regional towns in every state.
In April, Beam announced publicly that its profits had increased 36 per cent to a record $US53 million (A$79 million) for 2023.
The leaked correspondence reveals Beam president Deb Gangopadhyay – named with co-founder Mr Jiang in Forbes’ 30 under 30 for consumer technology in Asia in 2019 – emailed his team on April 17 last year, pitching a “risk-taking” initiative to increase deployed vehicles in cities by “adjusting” the definitions of publicly reported data provided to Ride Report.
“The value could be quite high and immediate,” Mr Gangopadhyay told his colleagues, estimating the number of deployed vehicles could be hiked by up to 20 per cent with “high certainty”.
“I think we should execute this with high urgency once aligned.”
Mr Gangopadhyay suggests some operational vehicles could be marked as unrideable, unknown, or having low battery – so they don’t appear as “available” on the app – but warns “we need to be careful as that vehicle could get trips but not show up as a vehicle (in Ride Report) – so easy to flag”.
In another email on May 29, Mr Gangopadhyay writes that marking scooters as “unknown” is “promising in that it seems to remove vehicles altogether from Ride Report”, but warns if a lot of “unknown” vehicles are being ridden by customers “that might be a yellow flag”.
He suggests that some scooters could be marked as unknown if they had “no ride for x hours”, and he asked whether a Ride Report executive would be “supportive of us having definitions that help us deploy a little more?”
Tom Cooper, the company’s Australia, New Zealand and US regional general manager, replied and said he did not believe the executive would be supportive.
“He takes his role as the watchdog seriously and in the end cities are his clients,” Mr Cooper said.
In the Slack “war room” chat on July 18 last year, Beam’s Sydney-based global director of corporate development Ashan Sanjeeva said he and Mr Cooper had set targets for each city as “requested space between Ride Report and actual DV (deployed vehicles).”
Mr Sanjeeva said Brisbane’s target was 350 extra vehicles, 150 in Canberra, 100 in Townsville, 300 for Auckland and 100 for Wellington.
He repeatedly raises a “risk” in Brisbane “should a council inspector come across a hidden vehicle and check RR to see if company deployed or user parked, they will not find the answer – as I understand the situation – and there may be a question raised”.
In a statement, Michael Schwartz of US-based INRIX, the parent company of Ride Report, said in the past fortnight Ride Report staff were made aware of “concerns” Beam was creating data inconsistent with international standards.
“Once councils told Ride Report of these concerns, staff immediately reviewed historic Beam data in all markets where Ride Report has data. Fortunately, the data driven approach taken by most councils in Australia and New Zealand meant Ride Report had stored a digital paper trail of Beam’s activities, so staff were able to quickly identify patterns within the data that are consistent with the concerns cited in your email,” Mr Schwartz said.
In the written statement from Beam Mobility, Mr Jiang said the company had “taken an approach” of marking certain vehicles as “unknown” or inactive in the Ride Report app, and then deployed extra vehicles to ensure “there was an adequate number of usable vehicles available to the public within the limits of the agreed terms with councils and Ride Report’s system”. “However, as a result of this approach there have been instances where we have exceeded the vehicle allocation,” Mr Jiang said.
“While this was never our intention, it is something that we take seriously and are deeply apologetic for. We understand the importance of our social licence in our key markets and recognise that we need to do better in the future to meet the high standards our partners set for us. We emphatically reject any suggestion that this was a ‘scheme’ to deprive councils of revenue.”
Subsequent Fallout
New Zealand
Five days after the original story broke, on 29th Aug 2024 online media Stuff NZ reported:
“Wellington City Council is investigating e-scooter operator Beam after the company’s licence was cancelled in Auckland over a serious compliance breach.
Auckland Council cancelled the micromobility company’s licence after it found Beam had deployed 530 more of its purple e-scooters than permitted.”
Brisbane
A few days later The Guardian reported on 2nd September that Beam had lost its licence to operate in its biggest Australian market, Brisbane.
“City council alleges cap on scooter numbers ‘systematically exceeded’ by 500 a day but company ‘disagrees’ with claims, saying it is ‘reviewing options’
Brisbane has become the first Australian city to kick out an e-scooter operator, after the council cancelled the licence for Beam to operate over allegations it regularly breached its caps.
The Brisbane City Council said it would now seek a replacement e-scooter operator for the city. The council’s transport chair, councillor Ryan Murphy, confirmed on Monday that the city had “terminated its contract with Beam”.
“Beam devices will progressively be removed and council will now seek to replace Beam with a new e-mobility operator as soon as practical,” Murphy said in a statement.
Canberra
Two days later, on 4th September, ABC News reported:
“The ACT government has ordered Beam Mobility to remove its e-scooters from Canberra streets after an investigation found the firm manipulated data about its fleet.
Other cities, including Brisbane, Townsville and Auckland, had already cancelled contacts with the Singapore firm over allegations of fleet caps being breached.
Transport Canberra and City Services Deputy Director-General Ben McHugh said Beam’s operating permit would not be renewed and its e-scooters must be deactivated by midnight on Sunday, September 8 and removed from public areas by 4pm on Friday, September 13.
Mr McHugh said officials had last month received information alleging Beam was acting outside of permit conditions by manipulating data and had launched an investigation.
“Although that investigation is ongoing, what we’ve found to date is that some of those investigations have been validated, particularly as it relates to the manipulation of data,” he said.
A Neuron spokesperson commended the ACT government for “taking swift and decisive action” against Beam Mobility.
“We are monitoring the situation very carefully across Australia and New Zealand and expect other cities to follow suit,” the Neuron spokesperson said.
The ACT government intends to undertake an expression of interest process to attract more e-scooter providers to the national capital.
“We want to continue to support more sustainable modes of transport which reduce car use,” Mr McHugh said.
Statement From Beam
We contacted Beam for a most recent update on the situation before posting this newsletter. On Wednesday 9th October we received the following reply:
“We have appointed a legal firm to conduct an external investigation.”
“Thanks for getting in touch. We have no further statements to make at this time.
“We have appointed a legal firm to conduct an external investigation and we aren’t able to comment on allegations regarding fleet numbers while the investigations are underway. As previously advised, we intend to share the findings from this investigation and our own internal investigation with all council partners and other key stakeholders once complete, subject to confidentiality.
“The list of Beam’s operational cities can be found on Beam’s website (https://ridebeam.com/cities).”
In a separate conversation we were assured that the map is being kept up to date to reflect the current situation.
A review of that list as at Thursday 10th October shows this many pins in towns and cities across each of the following regions:
Western Australia 9
South Australia 2
Queensland 7
New South Wales 4
Victoria 2
Tasmania 2
Northern Territory 1
New Zealand 6
Total 33
Interestingly, the map shows Brisbane as still being a current location, which contradicts the statements made by Brisbane City Council’s Transport Chair, Councillor Ryan Murphy. This may be due to the timing of a contract expiration period or some other reason that we’re not aware of. But Canberra, Townsville, Auckland and Wellington are no longer shown on the map.
Beam operates fleets of e-bikes and e-scooters and different cities may have fleets of one or the other vehicle type or both.
Beam’s ANZ CEO Tom Cooper is continuing in his role.
In summary, it appears that from Beam’s perspective it’s business as usual while they await the outcomes of their internal and external investigations.