US authorities probe Microsoft over alleged bribery and corruption

24 Aug 2018

Microsoft store in Berlin, Germany. Image: Robson90/Shutterstock

US financial and legal authorities are looking into bribery claims around the sale of Microsoft software products in Hungary.

The US Department of Justice and the Securities and Exchange Commission are looking into some of Microsoft’s business practices.

According to an investigation carried out by The Wall Street Journal, which was also cited in Reuters, the company sold software such as Word and Excel to middleman firms in Hungary. These firms then allegedly sold the software to government agencies in the country in 2013 and 2014 for close to full price. The US Foreign Corrupt Practices Act bans companies from paying bribes in exchange for business.

The US authorities are concerned that the middleman firms might have used the difference in price to pay bribes to government officials.

Microsoft responds

A spokesperson for Microsoft told The Wall Street Journal: “As soon as we became aware in 2014 of potential wrongdoing in our Hungarian subsidiary, we moved quickly to pursue a detailed investigation and hold people accountable.

“We fired four employees and terminated our business with four partners, and we’ve been defending ourselves against legal claims they raised as a result.” Those terminated reportedly included Istvan Papp, Microsoft’s country manager for Hungary.

The company also said that it has added AI-based technology to identify compliance risks.

Not the first investigation

This is far from the first time Microsoft has found itself under the regulatory microscope. In 2013, the company was investigated by US regulators over similar claims in Romania, Italy and China. It’s not known if the US is still investigating Microsoft’s activity in these other countries at present.

At the time of this investigation, Microsoft said: “In a company of our size, allegations of this nature will be made from time to time. It is also possible there will sometimes be individual employees or business partners who violate our policies and break the law. In a community of 98,000 people and 640,000 partners, it isn’t possible to say there will never be wrongdoing.

“Our responsibility is to take steps to train our employees, and to build systems to prevent and detect violations, and, when we receive allegations, to investigate them fully and take appropriate action. We take that responsibility seriously.”

Microsoft store in Berlin, Germany. Image: Robson90/Shutterstock

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects