The US Department of Justice and the Securities and Exchange Commission (SEC) have launched a probe into Microsoft over potential bribery and corruption related to software sales in Hungary, the Wall Street Journal (WSJ) reported.  

The probe is looking into how the US company sold its software to middleman firms in Hungary that then sold those products to government agencies in 2013-14, according to the report. 

Hungary chose Microsoft over free software providers in a public procurement tender in 2013 worth tens of billions of forints.

Authorities suspect that Microsoft may have sold some of its products to the intermediaries at steep discounts, and then the firms sold the products to the Hungarian government at close to full price or even higher. 

Investigators are probing whether the middleman companies used the difference to pay bribes and kickbacks to government officials.

According to the WSJ report, it all started with a meeting between Prime Minister Viktor Orban and Microsoft's then number two chief, Kevin Turner, in November 2012. Several Hungarian executives were also invited to the meeting. 

The Hungarian subsidiary, Microsoft's Magyarorszag, does not directly sell the company's products but works through intermediaries called Large Account Resellers (LARs), which also handle sales to government institutions.

The WSJ writes that some $30mn worth of transactions went through these intermediaries, which have pocketed some 30% or even 50-60% of the total value.

Microsoft launched an internal investigation in 2014 after similar malpractices surfaced at other subsidiaries. Investigators of the US software giant came to Hungary to conduct an in-depth review. 

Microsoft terminated its contracts with the four largest LARs in 2016 and four senior executives were fired, including the head of Microsoft Hungary, who found a job at the state investment agency right after his departure.

Microsoft's manager responsible for government relations was hired by the Prime Minister's Office and was put in charge of local and EU projects.

This isn't the first time that Microsoft has been under such scrutiny. Five years ago, the company was under investigation over similar claims in China, Romania, and Italy. Romania’s so-called “Microsoft case” concerning the sale of software licences for schools at inflated prices collapsed on a technicality earlier this year. Authorities suspect that the tech giant’s partners in Russia and Pakistan may have also bribed government buyers.

The Hungarian government did not respond to the WSJ's questions. Microsoft said that it cooperated with the authorities during the investigation. 

Hungarian media pointed out that the four largest resellers of Microsoft products have been very successful in winning state contracts since.