14 DAY TRIAL // The United States Department of Justice and Securities and Exchange Commission launched an investigation to determine whether Microsoft has been involved in what may be a case of bribery and corruption related to software sales to the Hungarian government.
A report from The Wall Street Journal reveals that the software giant is being investigated after it sold discounted software to a number of middleman firms in Hungary and the same software solutions were then re-sold to government agencies at full price.
It’s believed that the difference between Microsoft’s price and the one paid by the Hungarian government was used for bribes and kickbacks for government officials that facilitated the sale, the report notes.
Microsoft accelerated its efforts to expand in the region back in 2012, with company officials meeting with Hungarian Prime Minister Viktor Orban during the same year to discuss possible software deals.
The software giant has reportedly sold software worth no less than $30 million every year to local companies, offering discounts up to 30 percent, making the local subsidiary “the best performing of its size for two years running,” according to June 2015 Microsoft data.
Country manager fired
The cited source reveals that the resale of software to government agencies happened in 2013 and 2014, and Microsoft itself acknowledged that it launched its own investigation at its Hungarian sibling after learning of so-called “potential wrongdoing” in 2014.
“We’re committed to ethical business practices and won’t compromise these standards,” the company’s deputy general counsel, David Howard, was quoted as saying, while also adding that four employees, including country manager Istvan Papp, have already been fired.
Additionally, Microsoft ended business contracts with a total of four different companies based in Hungary after discovering violations of its policies, though no specifics were provided.
Microsoft has previously been involved in similar investigations based on bribery and corruption claims in a series of other countries as well, including Romania, Italy, China, Pakistan, and Russia.