The DOJ and the SEC have initiated investigations into allegations that Microsoft bribed foreign officials in order to secure new business.
Microsoft Corporation (NASDAQ:MSFT) has come under the watchful eyes of U.S. regulators according to a story from the Wall Street Journal. The computer giant and some of its business partners allegedly bribed foreign government officials in return for software contracts, and U.S. regulators are attempting to test the veracity of those claims.
According to sources cited by the Wall Street Journal, the case is currently in a preliminary phase, and no accusations have been made by the Department of Justice (DOJ) or the Securities Exchange Commission (SEC).
The case centers around Microsoft Corporation (NASDAQ:MSFT) dealings in China, Romania, and Italy. A former Microsoft employee accused the company of offering kickbacks to officials in exchange for software contracts.
Microsoft (NASDAQ:MSFT) is not a stranger to lawsuits or regulatory probes. The company was regularly on the line in antitrust cases a decade ago, though that mantle appears to have fallen to Google in recent years. However, allegations of bribery are of a different sort. If the case proceeds it will be educational to see how the company deals with it.
According to Microsoft, the tip about bribes offered in China led to a ten-month long internal investigation by the company. That investigation, which was conducted by an external law firm, turned up no evidence of wrong doing at Microsoft. U.S. regulators may have to go deeper in order to find evidence of bribery.
The tip that put regulators on the scent came from a Microsoft employee who was charged with finding new business opportunities in China. According to the person, who remains anonymous, an executive in the company’s Chinese subsidiary instructed him to offer bribes to government officials in order to secure new business. The source was also involved in a labor dispute with the company, and left Microsoft in 2008.
In Italy the company is accused of offering gifts and trips to Italian officials in order to secure new business. The allegations said that the tit-for-tat exchanges were carried out by consultants working on Microsoft’s behalf, rather than the company itself. In Romania the story is similar. The company’s resellers are accused of offering bribes to officials from the Ministry of Communications in order to get business.
Microsoft Corporation (NASDAQ:MSFT) has already looked into some of these allegations, and found no evidence of illegal behavior. The DOJ/SEC probe is in its early days, its latter days might be painful for Microsoft.