Feds probe Microsoft’s relationships to partners accused of bribery
The Wall Street Journal reports that the Justice Department and the Securities and Exchange Commission are looking into claims from a former Microsoft representative in China.
Seattle Times technology reporter
U.S. regulators are investigating Microsoft’s relationship with some business partners accused of bribing foreign officials in return for software contracts, according to The Wall Street Journal.
The claims, which are being investigated by lawyers from the U.S. Justice Department and the Securities and Exchange Commission, came from a former Microsoft representative in China, the Journal said Tuesday, citing people familiar with the probe.
The investigation also encompasses some resellers and consultants in Romania and Italy.
The Journal report said the investigation is in its early phase, and the government has not accused Microsoft or its partners of wrongdoing.
The report also said Microsoft had conducted an internal investigation — using an outside law firm — of the China allegations in 2010, and had found no evidence of wrongdoing.
Spokespeople for the DOJ and SEC declined to comment and neither confirmed nor denied the existence of any investigation.
Microsoft declined interviews on the matter, but John Frank, the company’s vice president and deputy general counsel, wrote an official blog post on the matter.
“We take all allegations brought to our attention seriously and we cooperate fully in any government inquiries,” he wrote, noting that it isn’t unusual for such investigations to find that an allegation is without merit.
Still, he wrote: “In a company of our size, allegations of this nature will be made from time to time. 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.”
Microsoft has more than 50 employees who investigate potential breaches of company policy, Frank wrote, and an additional 120 who focus on compliance.
“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,” he wrote. “We take that responsibility seriously.”
The government investigation is being conducted under the 1977 Foreign Corrupt Practices Act, which makes it illegal for U.S. companies to corruptly attempt to influence a foreign official to gain a business advantage.
The DOJ and SEC have investigated hundreds of cases under the act, though it’s hard to determine how many of those have resulted in charges, said Eric Sussman, an attorney and co-chairman of the regulatory enforcement and white-collar litigation practice with the law firm Kaye Scholer.
(The Wall Street Journal says that since 2009, the DOJ has brought 108 cases while the SEC has brought 77.)
Many of the cases have resulted in settlements.
Companies found guilty typically end up paying a fine, while individuals found guilty have typically served prison time, Sussman said.
Janet I. Tu: 206-464-2272 or firstname.lastname@example.org. On Twitter @janettu.