Bribery Allegations Surface about Microsoft Employees in China, Romania and Italy

Did Microsoft (News - Alert) employees offer bribes to officials in foreign nations in order to capture lucrative software contracts in those countries?

That’s what a recent report in The Wall Street Journal claims, citing unnamed sources. And the alleged practices are getting a strong response.

Some observers aren’t surprised about the allegations at all, suggesting that’s just what is needed to carry on business globally, amid corrupt and greedy officials and a competitive marketplace.

But there are others who are concerned. The U.S. Justice Department, for one, and the Securities and Exchange Commission are also reportedly investigating the claims.

Microsoft, meanwhile, says it cooperates in any government investigation – not commenting on the report of any specific case. “We take all allegations brought to our attention seriously, and we cooperate fully in any government inquiries,” John Frank, Microsoft's vice president and deputy general counsel, said in a carefully-worded statement. “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. 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.”

In reference to the recent report, Frank said, “the matters raised in the Wall Street Journal are important, and it is appropriate that both Microsoft and the government review them. It is also important to remember that it is not unusual for such reviews to find that an allegation was without merit. (The WSJ reported earlier this week that an allegation has been made against the WSJ itself, and that, after a thorough investigation, its lawyers have been unable to determine that there was any wrongdoing).”

The practices described in the new allegation allegedly took place in China, Romania and Italy, The Journal reports. An anonymous whistle-blower was apparently the source of the tip to U.S. regulators.

Bribes such as those alleged could be in violation of the Foreign Corrupt Practices Act. Since 2009 the Justice Department has investigated at least 108 cases, and the SEC (News - Alert) has investigated at least 77 cases – news reports said. They’ve led to fines of over $2 billion, with most of the cases getting settled between the parties.

“In a company of our size, allegations of this nature will be made from time to time,” Frank said in the statement. “It is also possible there will sometimes be individual employees or business partners who violate our policies and break the law. In a community of 98,000 people and 640,000 partners, it isn’t possible to say there will never be wrongdoing. Our responsibility is to take steps to train our employees, and to build systems to prevent and detect violations, and when we receive allegations, to investigate them fully and take appropriate action. We take that responsibility seriously.”

But one member of the public, “BigAl,” after reading Frank’s statement, said on Microsoft's website, “What a load of rubbish.”

Another calling him/herself, “Sales Rep Romania” said on the site, “I work in Microsoft Sales Romania. This is such a hypocrisy!!! ‘Do whatever you have to do to win this contract!!’ This is what our managers told us in every occasion, especially with government contracts and the oil companies. And now they pretend they have some sort of values? This makes me sick. It was not about kickbacks but, rather, about serious bribes of 100s of thousand of euros funneled via subcontractors. Just investigate some of the subcontracts where Microsoft won (as a front – or ‘paravan’ as we called it in Romanian) so we get market share expansion, but with no profit as we gave the contract to our ‘friend’ subcontractors that, otherwise, could never have won those contracts (because they didn't have enough credentials – credentials which, BTW, are typically rigged in order to match unique features of Microsoft whether those are relevant or not).”

“Then, in exchange for the ‘service’,” the statement continued, “they were giving us kickbacks, out of which we give back to the government/oil industry via phantom consulting contracts. Bleah… IMO, all this is all right - just, please, and I mean, by God, please, don't act scandalized and surprised all of the sudden. It insults our intelligence.”

The allegation made by Sales Rep Romania actually led to an official response from an in-house attorney at Microsoft. “We would like to learn as much as we can about the concerns you have raised so that we may appropriately review them. If you are a Microsoft employee, we trust that you are aware of the various means available to discuss or explain your concerns, including confidentially (to the extent permitted by law). I have listed some of our reporting and escalation tools below; I have also provided my contact information if you would like to contact me directly. We are also willing to explore other options with you to allow further dialogue to occur, including putting you or a representative for you in contact with our outside counsel (his contact information is below). We look forward to hearing back from you soon,” Greg Vamos, an assistant general counsel for the company, said in the online response.