MICROSOFT CORPORATION

INDUSTRY

Technology / Software / Electronics

CORPORATE HEADQUARTERS

Redmond, Washington, United States

SUMMARY OF ALLEGATIONS

Nationality of Foreign Officials: China

Summary of Allegations:

The Wall Street Journal article of 19 March 2013 stated that an anonymous tipster and former representative of Microsoft's Chinese subsidiary (Microsoft China) has alleged that an executive at the subsidiary told the tipster to bribe government officials in China in order to acquire government contracts. According to sources, a ten-month investigation that Microsoft concluded in 2010 found nothing to support the allegations.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: Hungary, Saudi Arabia, Thailand, Turkey

Summary of Allegations:

Between 2012 and 2015, Microsoft’s subsidiaries made improper payments to various government officials in order to obtain business for Microsoft. The payments took various forms: excessive discounts, cash payments via third party intermediaries where there was no evidence of any services being provided, and improper travel and gifts. Microsoft subsidiary employees maintained slush funds to fund these bribes, provided false justifications to support the need for such payments, and did not accurately record the details of all sales transactions and third-party service arrangements.


Approximate Alleged Payments to Foreign Officials: laptops, furniture, gifts, trips, cash

Business Advantage Allegedly Obtained: license deals

Nationality of Foreign Officials: Italy

Summary of Allegations:

The 19 March 2013 article from the Wall Street Journal reported allegations that Microsoft's "Italian unit" (presumably Microsoft Italia) provided gifts and trips to Italian government officials through consultants in order to acquire government contracts.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: Pakistan

Summary of Allegations:

In a 21 August 2013 article "Microsoft Bribe Probe Reaches into Pakistan, Russia Deals", the Wall Street Journal reported that the probe into Microsoft has expanded to include alleged wrongdoing in Pakistan.  In Pakistan a tipster alleged that "Microsoft authorized a consulting firm to pay for a five-day trip to Egypt for a government official and his wife in order to win a tender."  The DOJ and SEC have yet to bring any formal charges against the Company.


Approximate Alleged Payments to Foreign Officials: Trip to Egypt for government official and spouse

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: Romania

Summary of Allegations:

The Wall Street Journal article of 19 March 2013 reported that the U.S. Department of Justice ("DOJ") and U.S. Securities and Exchange Commission ("SEC") are investigating allegations that resellers associated with Microsoft bribed government officials in Romania in order to acquire software contracts with the Ministry of Communications.

In 2004, contract between the Romanian government and reseller of Microsoft products was signed for the purchase of the Microsoft software license. Although Microsoft allegedly offered a 47 percent discount on the software, such discount was allegedly not passed onto the Romanian government by the resellers. USD 20 million out of the USD 54 million paid by the Romanian government for the software allegedly ended in the hands of state officials alleged to have assisted reseller, Fujitsu Siemens, in obtaining the contract. Nine former Romanian ministers reportedly includes three from education, four from ICT, a former finance minister and a former government secretary.


Approximate Alleged Payments to Foreign Officials: USD 20 million

Business Advantage Allegedly Obtained: obtaining USD 54 million contract

Nationality of Foreign Officials: Russian Federation

Summary of Allegations:

In a 21 August 2013 article "Microsoft Bribe Probe Reaches into Pakistan, Russia Deals", the Wall Street Journal reported that the probe into Microsoft has expanded to include alleged wrongdoing in Russia.  According to the article an anonymous tipster in Russia told the Company that resellers of its software "allegedly funneled kickbacks to the executives of a state-owned company to win a deal."  The DOJ and SEC have yet to bring any formal charges against the Company.


Approximate Alleged Payments to Foreign Officials: Kickbacks to executives at a state-owned entity

Business Advantage Allegedly Obtained: Unspecified

ENFORCEMENT RESULTS

Agencies: Romania: National Anti-Corruption Directorate
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:

Romania's National Anti-Corruption Directorate ("DNA") launched an investigation into the purchase of educational Microsoft software licenses by the Romanian government from resellers at a cost 30 to 40 percent higher than the market average.

A spokeswoman for DNA disclosed that although Microsoft products are at the center of the investigation, Microsoft is not implicated in any wrongdoing. 

Also refer to Compendium for "Fujitsu Siemens Computers."



Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Administrative Order, Cease-and-Desist Order, Criminal Fine, Disgorgement, Non-Prosecution Agreement
Year Resolved: 2019
Compliance Monitor:
Ongoing: No
Details:

On 19 March 2013, the Wall Street Journal reported that the U.S. Department of Justice ("DOJ") and U.S. Securities and Exchange Commission ("SEC") are investigating allegations of bribery relating to Microsoft, two of its international subsidiaries and intermediaries in China, Italy, and Romania.

On 28 July 2016 and 27 April 2017, Microsoft in its 10-K and 10-Q respectively disclosed that it was under an anti-corruption investigation by the U.S. authorities regarding its overseas businesses.

On 23 August 2018, according to the Wall Street Journal, the DOJ and SEC were probing Microsoft’s suspected corruptive sales in Hungary using third parties and providing kickbacks in selling products to government agencies.

22 July 2019: 

On 22 July 2019, the U.S. Securities and Exchange Commission and the U.S. Department of Justice brought and resolved FCPA claims against Microsoft Corporation stemming from violations of the books and records and internal accounting controls provisions of the FCPA related to its operations in Hungary, Saudia Arabia, Thailand, and Turkey.

Microsoft’s Hungarian subsidiary, Microsoft Magyarorszag Kft., entered into a three-year non-prosecution agreement with the DOJ requiring that it pay a US$ 8.8 million criminal penalty.

The SEC issued a consensual cease-and-desist order against Microsoft requiring the company to pay a total of approximately US$ 16.6 million (US$ 13.8 million in disgorgement and US$ 2.8 million in prejudgment interest). The SEC declined to impose a civil penalty in light of the DOJ’s monetary fine.



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