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March 19, 2013 at 10:54 AM

WSJ: U.S. regulators investigate Microsoft and partners accused of foreign bribery

U.S. regulators are investigating Microsoft’s relationship with some of its business partners that have been accused of bribing foreign officials in return for software contracts, according to The Wall Street Journal.

The claims, which are being investigated by lawyers from the U.S. Justice Department and the Securities and Exchange Commission, came from a former Microsoft representative in China, according to the Journal report, which cites people familiar with the probe. The investigation also encompasses some resellers and consultants in Romania and Italy.

The investigation is in its early phase and the government has not accused Microsoft or its partners of wrongdoing, according to the Journal report, which also said Microsoft had apparently done an internal investigation of the China allegations in 2010, conducted by an outside law firm, and had found no evidence of wrongdoing.

Microsoft declined interviews on the matter but issued a statement from John Frank, Microsoft vice president and deputy general counsel, saying:

We take all allegations brought to our attention seriously and we cooperate fully in any government inquiries.  Like other large companies with operations around the world we sometimes receive allegations about potential misconduct by employees or business partners and we investigate them fully regardless of the source.  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.

Frank has also written a longer blog post about the matter, in which he says:

The matters raised in the Wall Street Journal are important, and it is appropriate that both Microsoft and the government review them. It is also important to remember that it is not unusual for such reviews to find that an allegation was without merit. …

In a company of our size, allegations of this nature will be made from time to time. It is also possible there will sometimes be individual employees or business partners who violate our policies and break the law. In a community of 98,000 people and 640,000 partners, it isn’t possible to say there will never be wrongdoing. Our responsibility is to take steps to train our employees, and to build systems to prevent and detect violations, and when we receive allegations, to investigate them fully and take appropriate action. We take that responsibility seriously.

Frank’s blog post is here.

The WSJ story (subscription required) is here.

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