Microsoft will pay out $ 26 million in a settlement to resolve charges as staff cutlery public authorities in Hungary, the Washington Post reported on Monday, with president and chief executive Brad Smith who told staff in an email "involved employee behavior that was totally unacceptable."
The settlement, in which Microsoft did not admit or deny wrongdoing, comes after a report from the Wall Street Journal in 2018 that the US Department of Justice and the Securities and Exchange Commission investigated whether Microsoft sold discounted software to Hungarian intermediaries who sold it to the country's government for inflated prices from 2013-2015. Said intermediaries ran the scheme by using some of their poorly earned backlash gains and bribes to the government involved in the procurement process.
Per the Post told the SEC in court documents that Microsoft did not have "adequate procedures" in place to protect against such criminal shenanigans:
In one case in 2014, Microsoft Hungary employees received a 27.85 percent discount for software to be sold to the Hungarian National Tax and Customs Administration, the Securities and Exchange Commission, one of the US agencies that Microsoft settled, said in a termination and order Monday. The retailer who handled this account did not pass full discount and used some of the difference "to fund incorrect payments to government officials," the agency said.
While the SEC noted that Microsoft was cooperating with the investigation, it said in an order Monday that the company did not have "adequate procedures in place to determine whether the discount requests were legitimate and whether the approved discounts were passed on to the end customers."
According to Post, the SEC said Microsoft earned $ 13.78 million in revenue from the scheme, which it will pay back to the SEC plus $ 2.78 million in interest. Microsoft Hungary entered into its own non-process agreement with DOJ, which required a $ 8.75 million payout. Reuters wrote that the settlement also solved the SEC accusations of sloppy Microsoft accounting controls in Saudi Arabia and Thailand that resulted in "slush funds" as well as an "inexplicable discount on a transaction involving Microsoft's Turkish entity."
"Although Microsoft Hungary did not voluntarily disclose the ill-treatment itself, Microsoft Hungary received the honor for its and Microsoft Corporation's substantial cooperation with the department's investigation and for implementing extensive remedial action," DOJ wrote in a press release.
The post of staff wrote Smith that Microsoft fired four employees from the Hungary unit and rescinded ties with four dealers there in 2016, but "the dealers responded by complaining to local regulators in an effort to restore business and some of the employees responded. by suing us. ”Smith added that he was“ grateful that local courts and regulators have supported our decision to cut all ties with individuals and businesses that, in our view, behaved in a totally unethical way, ”as well as he wrote, he was pleased with the SEC and DOJ recognized the "scope of our cooperation."
As the Post noted, the $ 25 million settlement significantly less than any other case involving violations of the law on foreign corrupt practices. Walmart agreed in June 2019 a $ 282 million settlement involving corruption in foreign subsidiary locations, including Mexico, Brazil and China, according to the paper, but the SEC accused Walmart of having blinded eyes for years to juice their foreign expansion. ] [Washington Post]