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Microsoft, Partners Probed Over Bribery Claims

Posted by Soulskill on from the all-about-the-benjamins dept.

c0lo writes "U.S. federal authorities are examining Microsoft's involvement with companies and individuals that allegedly paid bribes to overseas government officials in exchange for business. The United States Department of Justice and the Securities and Exchange Commission have both opened preliminary investigations into the bribery allegations involving Microsoft in China, Italy and Romania. The China allegations were first shared with United States officials last year by an unnamed whistle-blower who had worked with Microsoft in the country, according to the person briefed on the inquiry. The whistle-blower said that a Microsoft official in China directed the whistle-blower to pay bribes to government officials to win business deals. U.S. government investigators are also reviewing whether Microsoft had a role in allegations that resellers offered bribes to secure software deals with Romania's Ministry of Communications. In Italy, Microsoft's dealings with consultants that specialize in customer-loyalty programs are under scrutiny, with allegations that Microsoft's Italian unit used such consultants as vehicles for lavishing gifts and trips on Italian procurement officials in exchange for government business. In a blog post Tuesday afternoon, John Frank, a vice president and deputy general counsel at Microsoft, said the company could not comment about continuing investigations. Mr. Frank said it was not uncommon for such government reviews to find that the claims were without merit. Somehow, given the way OOXML became a standard, it wouldn't surprise me if it were an actual fire that caused this smoke."

14 of 137 comments (clear)

  1. Hate to defend M$ in any way, but by Anonymous Coward · · Score: 4, Insightful

    The China allegations were first shared with United States officials last year by an unnamed whistle-blower who had worked with Microsoft in the country

    I don't know who this "whistle blower" was (likely a government official who they didn't bribe well enough), but EVERY company that does business in China bribes. It's more than a way of life there, it's absolutely ubiquitous. The only reason you don't have to pay bribes to breathe there is because no government official has found a way to extract them yet (and they would if at all possible). To do business there, you have to start with the knowledge that the whole goddamn country is built on two things: bribes and lies. And if you're lucky, a generous enough bribe MIGHT get you SOME of the truth every now and then. It's worse than India and Russia combined.

    1. Re:Hate to defend M$ in any way, but by mc6809e · · Score: 4, Informative

      I don't know who this "whistle blower" was (likely a government official who they didn't bribe well enough), but EVERY company that does business in China bribes. It's more than a way of life there, it's absolutely ubiquitous.

      It's not just China, either.

      And calling this "bribery" isn't always correct. "Extortion" is probably just as a appropriate at times.

      Western multinationals can't do business in most parts of the world (and even US companies in parts of Europe) without some local official demanding money up front to make sure important documents like applications for permits don't "go missing", or that so-and-so's brother on some commission can be "advised" to make the right decision -- the implication being that you'll be held up if you don't pay up.

    2. Re:Hate to defend M$ in any way, but by ShanghaiBill · · Score: 4, Interesting

      EVERY large company that does business ANYWHERE bribes.

      Baloney. I have run my own business in the USA for more than twenty years. I have never paid a bribe. Not once. I have never been asked for a bribe either. If I ever was, the first thing I would do is report it to the police.

      I have also lived and worked in China, and have some employees there today. Although I have paid bribes ("facilitation fees") there, they are becoming much less common. China is trying to clean up their act, and a more "rule-based", transparent China is in everyone's best interest.

      The most common bribes paid in China today are not business bribes, but migrant workers trying to bribe their way around the Hukou System in order to send their children to public schools. The Hukou system is a form of feudalism that bonds workers to the land. Under Mao, it was used to ban all internal movement of people. Today, people are allowed to migrate, but they surrender most of their legal rights when they do so. Abolition of the Hukou would probably do more to improve human rights than any other single change in the world.

    3. Re:Hate to defend M$ in any way, but by Sarten-X · · Score: 3, Interesting

      Yep.

      I volunteered in Ghana for several months, and saw corruption on a daily basis:

      I can build that new room cheap and in a month... but it'd really be better if you pay twice as much to buy this good concrete (from my brother) rather than that crappy concrete that falls apart (when mixed ignoring the directions).

      Your visa's still a week away from expiration, but even though it's not written anywhere, there's a $25 fine for not renewing it two weeks in advance. Yes, I collect the fee personally, as a agent of the government. Cash only.

      Sure, you can take this taxi to that village, but there's a $5 fee for each bag, and each pocket.

      Yeah, that other guy bought a machete for $40, but this identical one is my best! It's $200.

      From the stories I've heard from others, the way for Westerners to do business in Africa is to first set a budget for a project, then find a local as a project manager, with the agreement that anything left in the budget goes into his pocket.

      --
      You do not have a moral or legal right to do absolutely anything you want.
    4. Re:Hate to defend M$ in any way, but by juancn · · Score: 4, Insightful
      It is pervasive in many places. Since the US frowns upon US companies bribing foreign officials, there are many consulting firms local to the country in question that take care of the bribes. These are never mentioned explicitly, so the US company doesn't actually pay the bribes, it just pays the consulting firm. And the consulting firm takes care of the bribes. That way you have deniability.

      Since the consulting firm is out of reach from the SEC et.al. discovery is a bitch and the cases cannot normally be pursued (unless you get one of the officials to testify, which is at least difficult).

    5. Re:Hate to defend M$ in any way, but by Anonymous Coward · · Score: 4, Insightful

      You are a complete idiot who is incapable of comprehending the English language.

    6. Re:Hate to defend M$ in any way, but by CannonballHead · · Score: 3, Insightful

      WTF do people learn in school today?

      That they are special and should get what they deserve regardless of how hard they work? ;)

    7. Re:Hate to defend M$ in any way, but by NoKaOi · · Score: 3, Insightful

      And calling this "bribery" isn't always correct. "Extortion" is probably just as a appropriate at times.

      Or, in the US, where it's called "campaign contributions" and "lobbying."

  2. Are huge discounts almost like bribes? by girlinatrainingbra · · Score: 4, Insightful

    Considering how frequently the MS sales people seem to present a new option with lower licensing prices whenever a city or governmental agency is about to jump ship and get on board with Linux, isn't that sudden presentation of huge discounts almost like a bribe? Yes, i know that a bribe goes to a separate person in order for a transaction to go through, but when you've got to discount your prices that much for people to buy your stuff, that doesn't seem like a good sign!
    .
    And before some idiot goes the other way and sez "gnu/linux must suck real bad since the only way they get people to take it is to give it away for free!", realize that the concept of Free software (with liberty) being free (of price and cost) is secondary to the freedom it gives to the end-user and the things that come back to the developer(s) with GNU-GPL-licensed software. The freedom is an inherent essence to free software. It's not priced at $zero because people don't want it. It's priced at $zero because the community of developers believes in giving away and sharing the fruits of their labor to the community of the world

    1. Re:Are huge discounts almost like bribes? by Anonymous Coward · · Score: 3, Insightful

      Discounts != Bribes, even if it's Microsoft offering them. It's called being competitive.

  3. Bribery in Romania ? You don't say :) by Anonymous Coward · · Score: 3, Informative

    FYI: Microsoft Romania has an official budget line for "greasing decision factors" and it's so widely known that they are "very generous" that everyone expects them to bribe.

    Posting as AC, from Romania :-)

  4. Simple by characterZer0 · · Score: 5, Insightful

    The issue here is that the US government is not getting (enough) bribes. This probe will make sure that gets rectified.

    --
    Go green: turn off your refrigerator.
  5. I can back that accusation up by walterbyrd · · Score: 4, Informative

    August 31, 2007

    Sweden's OOXML vote declared invalidgust 31, 2007

    The Swedish Standards Institute has declared its recent vote in favor of Microsoft's Office Open XML format invalid. It means that Sweden will probably abstain from an important upcoming international vote on whether to make the format a standard.

    The reason given by SIS was not the controversial circumstances surrounding the vote, in which
    Microsoft was found to have offered companies "incentives" if they voted in favor of OOXML. Instead, SIS cited a technicality, saying proper procedures had not been followed.

    http://www.infoworld.com/t/platforms/swedens-ooxml-vote-declared-invalid-013

  6. How things work in Italy by YA_Python_dev · · Score: 5, Informative

    In Italy, like the rest of the EU, public money must usually be spent through transparent public contracts awarded to the lowest bidder that satisfies all requirements.

    To make sure that Linux or LibreOffice don't cause problems the trick is very simple: they put e.g. "Windows 7" or "Microsoft Office 2010" in the requirements and pretend to have open competitive bids by comparing offers from different resellers for Microsoft software.

    Another common trick is to let the situation degenerate until it becomes an emergency. At that point the law allows contracts to be awarded directly to a company arbitrarly chosen by a politician. This explains "emergencies" that last decades like the garbages crisis in Naples.

    --
    There's a hidden treasure in Python 3.x: __prepare__()