Report: US officials probing Microsoft's sales in Hungary

The Justice Department and the Securities and Exchange Commission are reportedly probing whether sales practices in Hungary broke bribery and corruption rules.

Federal officials are investigating whether Microsoft's software sales in Hungary broke US bribery rules, the Wall Street Journal reports.

Both the Justice Department and the Securities and Exchange Commission are reportedly probing whether middleman firms in Hungary paid bribes and kickbacks to government officials to secure sales of Word and Excel to the Hugarian government. These middlemen reportedly obtained the software at a discounted price, sold it to the Hungarian government at near-full price and then gave the savings to government officials as bribes. The US Foreign Corrupt Practices Act bars firms from paying bribes in exchange for business.

In a statement to the Journal, Microsoft deputy general counsel David Howard said the company is "committed to ethical business practices" and cooperating with government officials. Howard said the company learned of "potential wrongdoing" in 2014 and opened an internal investigation into the matter. A Microsoft spokesperson confirmed this to ZDNet, noting that Microsoft fired four employees and terminated its business with four partners as a result of its own investigation.

In 2013, US officials similarly investigated bribery and corruption allegations against Microsoft's business practices in Russia, Pakistan, China, Italy and Bulgaria.A Microsoft spokesperson told ZDNet in a statement that in 2014, the company developed a "comprehensive response" to its concerns regarding the ways partners and resellers were using discounts. The company has created a program to improve transparency around discounts for government customers. Additionally, partners are contractually required to comply with local and US laws.

The spokesperson added, "Finally since 2017 we've been developing and using new AI based technology to better identify compliance risks, including around the use of these types of discounts."