Microsoft has paid out $25 million to settle a U.S. government investigation into alleged bribery by former employees in Hungary.
Bloomberg reports that Microsoft has agreed to pay $25 million to settle a U.S. government investigation into alleged bribery by former employees in the country of Hungary. Microsoft’s Hungarian subsidiary has entered into a non-prosecution agreement with the DOJ alongside a cease-and-desist order with the SEC. According to an SEC filing, the case related to violations of the Foreign Corrupt Practices Act.
The Justice Department concluded that between the years of 2013 and 2015, “a senior executive and some other employees at Microsoft Hungary participated in a scheme to inflate margins in the Microsoft sales channel, which were used to fund improper payments under the FCPA,” according to Microsoft’s Chief Legal Officer Brad Smith.
Microsoft allegedly sold software to partner at a discount, those partners then resold those products to the Hungarian government at an increased price. The price difference then funded kickbacks to government officials. Microsoft has since fired employees engaging in this practice. Smith wrote in an email: “We were deeply disappointed and embarrassed when we first learned about these events several years ago, and we hope that all of the steps we’ve since taken, including today’s settlement, send a strong message. As a company, we do not tolerate employees and partners who willfully break policies that go to fundamental issues of business integrity.”
The SEC also noted that some Microsoft employees violated the law by engaging in unethical business practices in Saudi Arabia, Turkey, and Thailand. Microsoft has now required discounts to sales partners to be given directly to government customers and makes customers aware of any discounts to ensure that they are receiving them.