US feds investigating Microsoft, partners over foreign bribery claims

Summary:However, similar reports surfaced last week regarding the very newspaper first reporting today's news, that turned out to be nothing more than Beijing's feather fluffing.

US federal authorities are reportedly investigating an alleged bribery scheme involving Microsoft and its partners in China, Romania and Italy, according to a report by The Wall Street Journal.

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According to the paper, the Justice Department and the Securities and Exchange Commission are looking into claims made by a former Microsoft representative in China, as well as the company's "relationship" with consultants and resellers in the two European member states. 

The allegations, made by the former Microsoft representative, said China's local subsidiary company offered benefits in return for the completion of software contracts. The person who tipped off the Journal ended his contract with the company in 2008, but was also involved in a dispute over labor with Microsoft in China.

It's understood that the two US federal agencies are reviewing whether Microsoft had any involvement in offering bribes to secure contracts in Romania's Ministry of Communications, which refutes the claims. In Italy, the two agencies are reportedly looking into Microsoft's relationships with its consultants, and if they offered gifts and trips in exchange for government business.

Microsoft's deputy general counsel John Frank told ZDNet (via a company spokesperson) that these allegations occur from time to time and that the software giant investigates them thoroughly. 

"We take all allegations brought to our attention seriously and we cooperate fully in any government inquiries."

In a company blog post posted shortly after this article was first published, Frank noted that the company "cannot comment about ongoing inquiries," but detailed the firm's approach to compliance in the 112 countries it operates in. 

However, the report should be taken with a pinch of salt considering recent allegations against, ironically, the newspaper that first reported the investigation into Microsoft's affairs.

It comes only a few days after the Journal itself was investigated by US federal authorities over what appear to be claims of bribery, but were not pursued by the US government. Instead, the Journal, owned by the Rupert Murdoch's News Corporation empire, blamed China for retaliating against the newspaper's critical reporting of Beijing in recent weeks.

He added: "Like every large company with operations around the world we sometimes receive allegations about potential misconduct by employees or business partners. We also invest heavily in proactive training, monitoring and audits to ensure our business operations around the world meet the highest legal and ethical standards.

While it's not uncommon for major technology companies, not limited to Microsoft, to investigate their own business practices. Apple, for instance, spent millions on probing its own Foxconn plants in China along with other elements of its supply chain to ensure that it remains above an ethical threshold

Topics: Microsoft, Government : US

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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