Microsoft will pay over $25 million to the Department of Justice and SEC to settle an investigation into its Hungarian subsidiary.
The probe surrounds indirect software sales to the Hungarian government, with the tech giant accused of selling Office software to the middlemen firms at a discounted rate. Those firms then sold the software to government agencies at full price, with officials allegedly pocketing the extra cash or using it to bribe government staff.
As part of the settlement, Microsoft did not have to confirm or deny wrongdoing. The SEC said that the company was cooperative in the investigation, it didn’t have sufficient procedures in place to ensure the discounts it approved were being passed on to customers.
Changing its Ways, or Saving Face?
According to Reuters, the payments also settle civil charges in Saudi Arabia, Thailand, and Turkey. Microsoft initially stood accused of violating the Foreign Corrupt Practices Act.
“As the DOJ explained, a Microsoft Hungary executive and other Hungary employees ‘falsely represented’ to Microsoft itself that these discounts were needed. But that doesn’t absolve the company of legal responsibility for what happened,” said Microsoft President Brad Smith in a published email to employees.
“At one level, we should all recognize that this misconduct involved a small number of employees at Microsoft Hungary, all of whom are no longer with the company. We’re fortunate to have in place today a new set of leaders at our Hungarian subsidiary who are committed to the company’s high ethical standards. But it’s even more important that we take the time to learn from this moment, applying some broader lessons that are even more fundamental.”
Going forward, Microsoft has promised greater transparency, a stronger anti-corruption scheme, and use of machine learning to flag suspicious transactions. Either way, it got off lightly when compared to Wallmart, which had to pay $282 million after turning a blind eye to corruption for several years.