Microsoft Settles After FCPA Violations
Microsoft will pay a total of about $25 million in penalties, including a nearly $9 million criminal fine, to resolve an investigation into violations of the Foreign Corrupt Practices Act, the Department of Justice said in a July 22 press release. The violations arose from Microsoft's subsidiary in Hungary, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft, which was involved in a “bid rigging and bribery scheme” related to the sale of Microsoft software licenses to government agencies, the press release said. The DOJ also released the non-prosecution agreement and statement of facts.
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Beginning in 2013, employees and a senior executive at Microsoft Hungary “participated in a scheme to inflate margins in the Microsoft sales channel” as the company attempted to sell software licenses to the Hungarian government,” the DOJ said. Microsoft Hungary employees “falsely represented to Microsoft that steep discounts were necessary to conclude deals with resellers who bid for the opportunity to sell Microsoft licenses to government customers,” the press release said. The savings were not actually “passed on to the government customers,” the DOJ said, but instead were used for “corrupt purposes.” The savings were recorded as “discounts” and stored in tools and databases on Microsoft servers in the U.S., the press release said.
The DOJ said Microsoft Hungary did not voluntarily self-disclose the violations but “received credit” for its “substantial cooperation” with the investigation and for “taking extensive remedial measures.” Those included “an enhanced system of compliance and internal controls, company-wide, to address and mitigate corruption risks,” the press release said. Microsoft Hungary will pay an $8.7 million criminal penalty, while Microsoft Corp. will pay the Securities and Exchange Commission about $16.5 million for “conduct in Hungary,” the press release said.