Microsoft Corp agreed on Monday to pay about $25.3 million, including a criminal fine to settle US charges that it made improper payments that were used to bribe government officials in Hungary and other countries.
Microsoft is on the hook at home for alleged crimes abroad. The company has agreed to pay about $25 million in settlements with both the Justice Department and SEC over charges that its Hungary subsidiary violated the Foreign Corrupt Practices Act. The division allegedly discounted prices for its resellers and distributors between 2013 and 2015, using the increased profit margins to fund bribes for government officials and clinch lucrative software deals with Microsoft.
The US Department of Justice said Microsoft Hungary will pay the $8.75m criminal fine, as part of a three-year non-prosecution agreement in which it “admits, accepts and acknowledges” responsibility for employees’ misconduct.
Microsoft also agreed to pay nearly $16.6m to settle related civil charges by the US Securities and Exchange Commission (SEC) over its activities in Hungary, Saudi Arabia, Thailand and Turkey, without admitting wrongdoing.
In an email to employees, Microsoft President Brad Smith said the settlements “involved employee misconduct that was completely unacceptable,” and said the “small number” of employees involved in Hungary were no longer with the company.
Smith said in the email’s subject line that “There is no room for compromise when it comes to ethical business practices.”
Prosecutors said the Hungarian scheme generated at least $14.6m of improper profit for Microsoft between 2013 and 2015, in connection with the sale of software licenses to Hungarian government agencies.
Executives and employees at Microsoft Hungary, which is based in Budapest, were accused of falsely telling Microsoft that steep discounts were needed to complete the transaction.
Prosecutors said the savings should have gone to customers, but were instead used by intermediary resellers in part to pay bribes to government officials, with Microsoft recording the discounts as
legitimate business expenses.
