Report: Bribery probe targets Microsoft partners
REDMOND, Wash. (AP) - Microsoft is entangled in a U.S. government investigation into whether the software maker and some of its business partners resorted to bribery to close deals in China, Romania and Italy, according to a report published Tuesday.
Citing anonymous people familiar with the matter, The Wall Street Journal said the Justice Department and the Securities and Exchange Commission are examining whether kickbacks were paid to foreign officials to help close sale of software. The probe's targets include resellers of Microsoft software, company consultants and Microsoft's own employees outside the U.S., according to the Journal.
The newspaper emphasized that the inquiry remains in an early stage and there have been no accusations of wrongdoing.
In a blog post, Microsoft lawyer John Frank said the issues raised in the Journal's story are important enough to merit a review by the Redmond, Wash., company and the federal government.
"We take all allegations brought to our attention seriously, and we cooperate fully in any government inquiries," wrote Frank, Microsoft's deputy general counsel. "Like other large companies with operations around the world, we sometimes receive allegations about potential misconduct by employees or business partners, and we investigate them fully, regardless of the source."
Both the Justice Department and the SEC declined to comment.
The reported investigation poses another potential legal headache for Microsoft, which has been sparring with government regulators in the U.S. and Europe for the past two decades.
Most of the regulatory battles have been over whether Microsoft abused its position as the leading maker of personal computer software to thwart competition. Microsoft suffered it latest setback in that regulatory arena earlier this month when European regulators fined the company 561 million euros ($733 million). Microsoft violated an agreement to provide users of PCs running on its Windows operating system with an alternative to its Internet Explorer Web browser.
The investigation cited by the Journal revolves around the Foreign Corrupt Practices Act, a 36-year-old law that forbids U.S. companies from bribing foreign officials to close deals.
An anonymous tipster who helped Microsoft make sales in China passed along the allegations of sales misconduct to U.S. government regulators last year, according to the Journal. The tipster alleged an executive working at Microsoft's China subsidiary authorized paying bribes to close sales, the Journal reported.
Microsoft had hired an outside law firm to look into the same allegations during a 10-month investigation that concluded in 2010 without finding any wrongdoing, according to the Journal.
U.S. regulators are also examining whether bribes were paid in exchange for software contacts in Romania and Italy, the newspaper said.
In his blog post, Frank said Microsoft is committed "to the highest legal and ethical standards wherever we do business." Nevertheless, he conceded that lapses may be inevitable in a company as large as Microsoft, which employs nearly 98,000 people and has ties to 640,000 business partners scattered across 112 countries.
About 170 of Microsoft's employees work on compliance issues, including more than 50 who primarily investigate allegations of misconduct.
Citing anonymous people familiar with the matter, The Wall Street Journal said the Justice Department and the Securities and Exchange Commission are examining whether kickbacks were paid to foreign officials to help close sale of software. The probe's targets include resellers of Microsoft software, company consultants and Microsoft's own employees outside the U.S., according to the Journal.
The newspaper emphasized that the inquiry remains in an early stage and there have been no accusations of wrongdoing.
In a blog post, Microsoft lawyer John Frank said the issues raised in the Journal's story are important enough to merit a review by the Redmond, Wash., company and the federal government.
"We take all allegations brought to our attention seriously, and we cooperate fully in any government inquiries," wrote Frank, Microsoft's deputy general counsel. "Like other large companies with operations around the world, we sometimes receive allegations about potential misconduct by employees or business partners, and we investigate them fully, regardless of the source."
Both the Justice Department and the SEC declined to comment.
The reported investigation poses another potential legal headache for Microsoft, which has been sparring with government regulators in the U.S. and Europe for the past two decades.
Most of the regulatory battles have been over whether Microsoft abused its position as the leading maker of personal computer software to thwart competition. Microsoft suffered it latest setback in that regulatory arena earlier this month when European regulators fined the company 561 million euros ($733 million). Microsoft violated an agreement to provide users of PCs running on its Windows operating system with an alternative to its Internet Explorer Web browser.
The investigation cited by the Journal revolves around the Foreign Corrupt Practices Act, a 36-year-old law that forbids U.S. companies from bribing foreign officials to close deals.
An anonymous tipster who helped Microsoft make sales in China passed along the allegations of sales misconduct to U.S. government regulators last year, according to the Journal. The tipster alleged an executive working at Microsoft's China subsidiary authorized paying bribes to close sales, the Journal reported.
Microsoft had hired an outside law firm to look into the same allegations during a 10-month investigation that concluded in 2010 without finding any wrongdoing, according to the Journal.
U.S. regulators are also examining whether bribes were paid in exchange for software contacts in Romania and Italy, the newspaper said.
In his blog post, Frank said Microsoft is committed "to the highest legal and ethical standards wherever we do business." Nevertheless, he conceded that lapses may be inevitable in a company as large as Microsoft, which employs nearly 98,000 people and has ties to 640,000 business partners scattered across 112 countries.
About 170 of Microsoft's employees work on compliance issues, including more than 50 who primarily investigate allegations of misconduct.
Boeing apparently had some of this trouble back in the 1970's selling airplanes in the Middle East where bribery is a routine and customary aspect of doing business.  The SEC apparently alleged that [OMG!!] Boeing had actually done this!  It was apparently settled with a "consent decree" where Boeing (1) did NOT acknowledge having done anything wrong, (2) promised NOT TO DO IT AGAIN, and (3) wrote a report to the SEC detailing what it was that had actually been done.  Just saw one article about it, in an obscure business journal, and never heard anymore about it after that.  Companies are able to get stuff like this hushed up by alleging that the details "would reveal proprietary marketing and sales info...."
To stop it #traditionalmedia #DOJ #FBI #SEC must always look into these #serious allegations of #whitecriminal acts. So far all we get is the statusquo window dressing treatment; then the story quietly goes away. Sad.
The US Gov't is investigating bribery? Since when?, and why not start in Congress?
@ballardanian Because you can't have bribers investigating bribery.lol Their all crooks. The DOJ is but a shell of what it used to be. Its as corrupt as the rest of the federal agencies. Its why its time to hand these duties back over to what the constitution guarantees, the states. Mush easier to control the corruption at the state level.
How else does one do business in these countries? With governments like theirs, everything is under the table. and government palms greased.
We must get used to it,that's the way they do business there like it or not !
Having traveled a few countries and knowing a few business people in each, what looks like bribery in the US is just the cost of doing business in these other countries. It has nothing to do with how business is done in the US. You can not apply standards from one country to the other. It does not matter if there is serious competition to the business or not. How many other companies can provide a solution like Microsoft? None. IBM comes close but even their client machines runs Windows. You can forget about Apple since they are only client machines now and no one has been able to make a serious business model around Linux. There is just too much in fighting between who has the best Linux model to compete. Most companies want only one neck to strangle when things go wrong and right or wrong Microsoft provides that neck.
@Beam_Me_Up Except that Micro$oft never gets strangled. Why? Bribery.lol
Of course they bribe, thats how capitalism works. Its just about your bottom line. In us more honest people the bottom line is we don't break the law and we don't bribe, for people working for large corporations the bottom line is purely financial, no ethics or morality involved. Thats what capitalism is, it has not ethics. Most of the real big bribery cases have been in Afghanistan and in central and south america.Â
Those are "finder's fees" or "commissions." Grow up. This is the way  a lot of the world works. Get back to the real work of banning Big Gulps and hiding cigarettes at the bodega.
@Getov Mylon finders fees.lol There's a sucker born every minute.
I don't think that the FCPA is a valid exercise of US government authority in the first place. It's a Carter-era law that should have been repealed under Reagan. I take issue with the notion of long-arm statutes in general, but this one is just off-the-charts intrusive. If I were on a jury, I would ALWAYS vote to acquit in an FCPA case, regardless of the facts of the case.Â
Don't worry, Microsoft. The FCPA violation case against Walmart is MUCH more clear cut than this and the justice department nor the SEC has done a thing about it. The US government is just upset because the money was not going to them instead of foreign government officials.
Isn't the Wall Street Journal facing bribery charges of their own?Â
wasting our money on foreign matter? and most likely, whatever country they are investigating doesn't even gift a F!
sounds like a good salesforce to me......Â
Bribery in some parts of the world to do business? Gasp! Who would have imagined...
Corporate corruption? Say it isn't so Sam....