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Microsoft Taking Allegations Seriously

Microsoft Corp. (MSFT), responding to a Wall Street Journal report that federal regulators are investigating the company’s ties to partners accused of bribing foreign officials, said it takes the allegations seriously.

Lawyers from the Justice Department and the U.S. Securities and Exchange Commission are examining allegations that Microsoft partners bribed government representatives in exchange for software contracts, the Wall Street Journal reported yesterday, citing people it didn’t identify. Allegations were made by a former Microsoft representative in China, according to the newspaper.

“We take all allegations brought to our attention seriously, and we cooperate fully in any government inquiries,” John Frank, Microsoft’s deputy general counsel, wrote in a blog posting. “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.”

Federal officials are also examining Microsoft’s relationship with certain resellers and consultants in Romania and Italy, the Wall Street Journal reported.

John Nester, a spokesman for the SEC, declined to comment. Emily Langlie, a spokeswoman for the U.S. Attorney’s Office in Seattle, said in an e-mail that the Justice Department doesn’t confirm or deny any investigation until something is filed in court. Michael Passman, a spokesman for the Justice Department, said the department “can neither confirm nor deny the existence of an investigation.”

Allegations Reviewed

The probe is in a preliminary phase, and the government hasn’t accused Redmond, Washington-based Microsoft or any of its business associates of wrongdoing, the newspaper reported, citing people familiar with the inquiry.

Microsoft said it employs more than 50 people to investigate potential breaches of company policy, as well as 120 more people to make sure the software maker complies with local laws and regulations.

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

The allegations in China were already investigated by Microsoft, which conducted a 10-month internal probe, the Wall Street Journal reported. An outside law firm hired to conduct the probe, which ended in 2010, found no evidence of wrongdoing, the newspaper said.

Romania Ministry

“Operations outside the U.S. may be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment, including the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments by our employees, vendors, or agents,” Microsoft (MSFT) has said in regulatory filings.

U.S. investigators are looking into allegations that resellers offered bribes to win software deals with Romania’s Ministry of Communications, the Wall Street Journal reported, citing people familiar with the matter.

The Romanian Ministry of Communications checked its records, which show that it “didn’t conclude the contract in 2008 to which the Wall Street Journal made reference,” it said in an e-mailed statement today. “The ministry concluded a contract in 2009 with a group of companies, but it’s important to mention that the sums don’t match the ones mentioned by the WSJ.”

The ministry added that it isn’t informed by suppliers about their potential discounts from their partners.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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