RSS
Did Microsoft bribe foreign governments for software deals?
The tech giant is under investigation for allegedly giving kickbacks to overseas officials
 
Microsoft is under investigation for allegedly bribing foreign officials.
Microsoft is under investigation for allegedly bribing foreign officials. REUTERS/Rick Wilking

Federal investigators are probing computer giant Microsoft over allegations that the company's associates bribed overseas governments in exchange for sweetheart business deals.

The Justice Department and the Securities and Exchange Commission have each begun preliminary investigations into the matter, according to The Wall Street Journal, which first reported the story Tuesday. The allegations were made by an unnamed former Microsoft business partner who claims the company doled out kickbacks to officials in China, Italy, and Romania in return for software contracts in those countries.

The company itself is not directly under investigation for potential violations of the Foreign Corrupt Practices Act, which prohibits bribery of foreign officials. The allegations refer to business partners in overseas Microsoft subsidiaries. However, the investigation will examine whether the company played a role in any wrongdoing.

In a statement, Microsoft Vice President and Deputy General Counsel John Frank said that the company was taking the allegations "very seriously," and that it fully supported the investigation.

"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," he wrote. "We also invest heavily in proactive training, compliance systems, monitoring, and audits to ensure our business operations around the world meet the highest legal and ethical standards."

The statement also noted that such investigations are fairly common, and frequently end with a finding that there is no substantive case. The SEC and DOJ conducted 23 investigations under the FCPA last year alone, and another 48 the year before.

Already, some are saying the investigation may be more sound and fury than anything else.

Microsoft conducted its own investigation into the accusations of impropriety in China back in 2010, and found them baseless. It's also been reported that the anonymous tipster was involved in a labor dispute with Microsoft when he left the company in 2008, casting doubt on the motive behind the allegations.

The specifics of the case are still unknown, so it is possible the accusations are indicative of nothing more than business as usual, says USA Today's Byron Acohido: "[S]alesmen by definition try to influence customers into signing on the dotted line. And Microsoft is nothing if not intense about closing deals."

The report should also "be taken with a pinch of salt," says ZDNet's Zack Whittaker, pointing out that the Wall Street Journal was itself briefly under investigation for similar allegations of bribing Chinese officials for news. The U.S. government decided not to pursue those bribery claims, and News Corp., the owner of the Journal, said the Chinese government was badmouthing the Journal in retaliation for unfavorable coverage.

 
Jon Terbush is an associate editor at TheWeek.com covering politics, sports, and other things he finds interesting. He has previously written for Talking Points Memo, Raw Story, and Business Insider.

THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER

Subscribe to the Week