WSJ: Microsoft under investigation in US over possible bribery in Hungary

Microsoft Corp. is under investigation by US authorities over potential bribery and corruption in a software sales contract in Hungary, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

US authorities also examined Microsoft for similar corruption practices in five other countries starting with 2013 – Romania, China, Italy, Russia and Pakistan, after allegations that the company’s business partners in those countries may have bribed government officials in order to obtain public contracts.

According to the WSJ sources, The US Justice Department and the Securities and Exchange Commission are looking into how Microsoft sold software to middleman companies in Hungary, who then sold those products to government agencies in 2013 and 2014. Intermediaries bought Microsoft’s products at significantly discounted prices and reportedly sold them to the government at closer to full prices. The difference may have been used to pay bribes and kickbacks to some government officials.

Microsoft said it became aware of “potential wrongdoing” in Hungary in 2014 and that it is cooperating with US authorities. The company said it fired employees related to the Hungary investigation, including the country manager, and terminated business relationships with four partners in Hungary.

Microsoft Romania’s former country manager Calin Tatomir is scheduled for trial next month, charged with laundering money and complicity in the abuse of public office during his time at the company. Prosecutors say he helped intermediaries selling Microsoft software to the government get an “undue advantage”. Microsoft itself isn’t charged with any wrongdoing.

Earlier in 2018, anti-corruption authorities in Romania closed the Microsoft case, the largest corruption investigation in the country’s history, due to a major judiciary error that caused charges against seven ex-ministers to be dropped because the crimes had been time-barred. Two businessmen were, however, indicted in the case.

Had the original case prosecutor, Mihaela Moraru Iorga, indicted the seven former ministers a few months earlier, the DNA would have earned a few years to continue the investigation without the statute of limitations running out. Iorga was fired from DNA last year.