The company is accused of selling Word and Excel to middleman firms in the country at a discounted rate from 2013-14. The firms would then sell the software to government agencies at close to full price, with officials possibly pocketing the cash. As you would expect, bribes to overseas officials are taken seriously and have been illegal since 1977. Microsoft fired four employees in relation to the probe and terminated relationships with four partners. “We’re committed to ethical business practices and won’t compromise these standards,” Microsoft deputy counsel David Howard told WSJ. He said Microsoft became aware of “potential wrongdoing” in 2014.
Not Microsoft’s First Rodeo
This isn’t the first time Microsoft has faced bribery probes, with a rash of similar complaints in Russia, Romania, Italy, China, and Pakistan in 2013. Russia’s case was particularly similar, while in Pakistan the company was accused of paying for a luxury trip for a government official. The SEC and U.S. Justice Department are investigating Microsoft for its activities in Hungary, but it’s not clear if probes in the other countries are ongoing. The SEC has the liberty to investigate a number of broad claims, and they’re often found to be bogus. However, the company could face a huge fine if it has broken the law. In 2017, Alstom received a DoJ fine of $772.3 million under the Foreign Corrupt Practices Act. Siemens received a $450 million fine in 2008, while BAE Systems was fined $402 million in 2009. The severity of the fine would be determined by the SEC, with factors like profit and the level of deception taken into account. WSJ says Microsoft sold up to $30 million in software annually to Hungarian middlemen over the past two years. Sources say that sales employees outside of Hungary signed off on the deals, though Microsoft says this was due to the misinformation of select employees in Hungary.
