Microsoft, which is often slow to comment with any substance when mud is flung its way, responded almost immediately after a Wall Street Journal article claimed Microsoft is the subject of probes being conducted under the Foreign Corrupt Practices Act by both the Justice Department and the Securities and Exchange Commission; allegations were made that kickbacks were given to foreign government officials in China, Italy and Romania for software contracts.
WSJ reported that the kickbacks were allegedly made by a "former Microsoft representative in China" and reported to U.S. investigators in 2012 by an "anonymous tipster" who was responsible for landing "potential new business." This "tipster" claimed that "an executive of Microsoft's China subsidiary instructed the tipster to offer kickbacks to Chinese officials in return for signing off on software contracts."
WSJ added that people familiar with the probe also allege that "U.S. government investigators are also reviewing whether Microsoft had a role in allegations that resellers offered bribes to secure software deals with Romania's Ministry of Communications, according to people familiar with the matter." Another investigation was allegedly launched into any involvement Microsoft may have had with consultants in Italy. Allegations have been made that "Microsoft's Italian unit used such consultants as vehicles for lavishing gifts and trips on Italian procurement officials in exchange for government business."
Microsoft's John Frank, Vice President and Deputy General Counsel, responded, "We take all allegations brought to our attention seriously, and we cooperate fully in any government inquiries. 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."
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).
We cannot comment about on-going inquiries, but we would like to share some perspective on our approach to compliance.
Microsoft is a "global company with operations in 112 countries." Frank added, "Compliance is the job of every employee at the company, but we also have a group of professionals focused directly on ensuring compliance. We have more than 50 people whose primary role is investigating potential breaches of company policy, and an additional 120 people whose primary role is compliance."
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. 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.
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Ms. Smith (not her real name) is a freelance writer and programmer with a special and somewhat personal interest in IT privacy and security issues. Smith has a diverse background in information technology, programming, web development, IT consulting, and information security. She focuses on the unique challenges of maintaining privacy and security, both for individuals and enterprises. She has worked as a journalist and has also penned many technical papers and guides covering various technologies. Smith is herself a self-described privacy and security freak.
Smith is an independent contractor and is not affiliated with any vendor that makes or sells information technology.
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