Microsoft is tied to hundreds of millions of dollars in foreign bribes

https://www.theverge.com/2022/3/25/22995144/microsoft-foreign-corrupt-practices-bribery-whistleblower-contracting

by jrepinc • 4 years ago

610 381 4 years ago

theverge.com

otterley6• 4 years ago

Source article: https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

VyseofArcadia2• 4 years ago

Former Microsoftie here.

After all the business ethics training videos I had to sit through, I am infuriated by this.

stocknoob• 4 years ago

Rules are for the little people.

cjbgkagh3• 4 years ago

It’s part of negotiating down punishments, in lieu of a big fine we’ll agree to force our staff to watch ethics videos.

asd88• 4 years ago

My thoughts exactly. Every year, the Standards of Business Conduct training talks about not bribing foreign officials and devs are like “who the hell is ever in that position anyway?”.

tedajax• 4 years ago

Me desperately trying to get a decent repro case for a bizarre networking bug in Halo: "Oh man, gotta remember, better not bribe any foreign officials while I sort this out."

russellbeattie• 4 years ago

If it helps, I had to sit through all that stuff at Amazon as well. I was in the bit that makes consumer electronics and never dealt with contracts in any way, yet still had to spend time learning not to make or take bribes from wholesalers or international businesses or governments. Every. Single. Year.

Initially the training software was badly written so you could just open up DevTools and type "v = document.querySelector('video'); v.currentTime = v.duration - 1000;" or similar and just bop through the sections. Later they seemed to track time on the server, so really the most I could do is turn off the window focus check and leave the tab open in a second monitor. So annoying.

wolverine87617• 4 years ago

"who the hell is ever in that position anyway?"

Microsoft does business worldwide, of course. Wouldn't that imply that many are in that position?

hef198982• 4 years ago

Those annual trainings are there to show compliance. This prevents pro active investigations by authorities into business conduct. Without those corporations are free to engage in all kinda of shady business behaviour. And when something turns sideways, the offending employees passed the training, so the company is shielded, to an extend.

akhmatova3• 4 years ago

Those annual trainings are there to show compliance.

And also obeisance -- on the part of the person required to sit through these trainings (and pretend that they had some connection to reality).

robertlagrant2• 4 years ago

the offending employees passed the training

This is the definition of ineffective training :)

jjkaczor2• 4 years ago

Exactly - all they are is formal "risk mitigation"

wolverine87617• 4 years ago

People downplay such training, but imagine the environment without it. Imagine if nobody officially talked about corrupt practices: it would create a very dark place for such things to occur, nobody would know what the rules are or what to do, and especially the silence would speak very loudly.

Edit: By training everyone, not just the people directly involved with such situations, anyone considering corrupt acts will know that everyone - from the tech support person who helps them send the corrupt message to the receptionist who takes the corrupt call to the finance underling who mails the check - everyone will recognize it. There is no talking the rube into helping them; there are eyes everywhere, all the time.

belter2• 4 years ago

In almost every country with a dictator and human right abuses, you will find a constitution guarantying civil rights and liberties of the individual...

[1] - "The Constitution of the Russian Federation"

Article 17

1. In the Russian Federation recognition and guarantees shall be provided for the rights and freedoms of man and citizen according to the universally recognized principles and norms of international law and according to the present Constitution.

2. Fundamental human rights and freedoms are inalienable and shall be enjoyed by everyone since the day of birth.

3. The exercise of the rights and freedoms of man and citizen shall not violate the rights and freedoms of other people.

Article 18

The rights and freedoms of man and citizen shall be directly operative. They determine the essence, meaning and implementation of laws, the activities of the legislative and executive authorities, local self-government and shall be ensured by the administration of justice.

Article 19

1. All people shall be equal before the law and court.

2. The State shall guarantee the equality of rights and freedoms of man and citizen, regardless of sex, race, nationality, language, origin, property and official status, place of residence, religion, convictions, membership of public associations, and also of other circumstances. All forms of limitations of human rights on social, racial, national, linguistic or religious grounds shall be banned.

3. Man and woman shall enjoy equal rights and freedoms and have equal possibilities to exercise them.

and so on...

[1] http://www.constitution.ru/en/10003000-03.htm

joey_bob• 4 years ago

The title is a bit inflammatory, but in this clip from Scalia's testimony relates the overall concept well.

https://www.youtube.com/watch?v=Ggz_gd--UO0

CRConrad2• 4 years ago

Maybe they just kept the Soviet one with some edits of the nation's name. That one was also wonderfully progressive and respecting of human rights... On paper. Come to think of it, did the Soviet Union really "go under"? Only in the sense of losing all its peripheral territories, AFAICS; the core remains. In several senses.

nopenopenopeno2• 4 years ago

Those trainings are just ass coverings for when the company goes to court.

spicymaki• 4 years ago

AFAIK the trainings are part of a settlement with the government after the company goes to court.

criddell2• 4 years ago

I read a story yesterday[1] how the policy inside Google is to cc their legal department on any emails that you think could make the company look bad in any future legal proceedings. As I understand it, this shields the email from discovery.

Did you have similar guidelines inside Microsoft?

[1] https://news.ycombinator.com/item?id=30760923

zht• 4 years ago

one thing that they teach you in this sort of training (never a Googler but been at at other big names) is that it is not a blank check to shield all emails from discovery by just cc-ing legal.

chihuahua• 4 years ago

No, never.

VyseofArcadia2• 4 years ago

As I recall, the informal guidance I got as a lowly Software Engineer II was, "if legal gets involved, you've already screwed up."

com2kid• 4 years ago

When I was at MS I once saw someone from legal jump into the middle of an email thread, that he wasn't on, and shut it down.

That was... interesting to say the least.

verall• 4 years ago

As I understand it, this shields the email from discovery.

LOL that's NOT how discovery works

mikestew2• 4 years ago

Did you have similar guidelines inside Microsoft?

As one there before, during, after that little DoJ/IE kurfluffle, I recall the guidelines to be simple: there are things you don't talk about in email[0]. Which is why this Google thing mystifies me: why are you talking about it in email at all? And then to rely on what sounds like some crackpot legal theory? (I mean, maybe it's not, and IANAL, but it reeks of "sovereign citizens don't have to pay taxes".)

[0] Yes, that is a vast oversimplification (though accurate) to make a point.

reincarnate0x142• 4 years ago

Many years ago, another division of my employer got caught bribing Nigeria. As a result, a bunch of people who were never in a position to do so had to sit through hours of ethics training. Some of it came with oddly specific examples. Halfway through one such lecture, in which we were being admonished to never accept a car from a customer, some engineer in the back did some quick mental arithmetic on his own salary versus costs of cars and asked "Which customers were giving out cars?"

We laughed. Instructor not so much.

Ekaros• 4 years ago

"Hypothetically speaking which customer offered a car?" "And again entirely hypothetically speaking how could one move forward to accept such offer?"

burntoutfire4• 4 years ago

Being that Instructor is 100% bullshit job. I.e. you're doing something entirely pointless, day in-day out, just so your company can later say to some lawyers that it was done. I feel bad for people who work those jobs.

saiya-jin• 4 years ago

In the banks we have the same. As IT guy, the amount of quarterly trainings and their focus is a bit crazy, most topics I will never ever touch since I don't work in ie Legal and I am so far from ever interacting or even seeing any client.

Most of the trainings are about a fine we got due to being caught doing something bad, say 10 years ago, and part of legal settlement is apart from direct fine, a nice 30-60 min training where they tell you that stealing and lying and cheating is bad.

Those trainings keep re-appearing quite consistently so they are really not that effective.

wolverine87617• 4 years ago

Perhaps by training everyone, potential bad actors know that everyone in the company will recognize what they are doing?

mianos• 4 years ago

I did one "Modern Slavery". The first time I saw the email request that I do the training I genuinely thought it was spam.

asdfasxcdf• 4 years ago

Can't wait for the next season of SBC!

asveikau• 4 years ago

When i was at Microsoft, i recall an engineer saying that corporate puts that in there so that when somebody is caught giving bribes they can point to them and say they're a lone wolf, bad actor, etc., because clearly the policy is not to give bribes, and they took the training course in this, we documented that...

Implication: they can fire that employee and continue to give bribes.

Ps. Full disclosure, I never witnessed anybody giving bribes, nor worked with anyone who would be in a position to do so.

jmspring3• 4 years ago

Finally an episode of SoBC where Nelson ends up blindfolded, kidnapped and taken to a black ops site? /s

Former here, too, I found it part of "big company" overhead. Had similar things many years ago at a different European based employer.

worik9• 4 years ago

SoBC?

givemeethekeys• 4 years ago

Did bizden / sales have to go through the same videos?

gentleman11• 4 years ago

It’s frustrating that law only applies to the lower classes, and not to the upper corporate classes

wolverine87617• 4 years ago

Who are the "lower classes" that do business internationally and are prosecuted by the US Departmet of Justice?

a4isms2• 4 years ago

"Conservatism consists of exactly one proposition, to wit: There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect."

—Composer and Software Architect Frank Wilhoit

https://crookedtimber.org/2018/03/21/liberals-against-progre...

dennis_jeeves12• 4 years ago

Lol, did you think otherwise?

RyJones• 4 years ago

When I went blue in 2005, I had to sit through sexual harassment videos by some guy.

Who had been fired.

For running HR like a harem.

gmiller123456• 4 years ago

Pointy Haired Boss: Everyone must attend mandatory ethics class at noon.

Dilbert: Is it ethical to steal our lunch hour to make us attend a work class?

Pointy Haired Boss: I wouldn't know, I'm not required to take the training.

LanceH• 4 years ago

At another big corp the training videos had a scenario where I would be on site with accommodations provided by the client. It asked whether I could accept a cook offered by the client.

I'm infuriated that I'm being offered t-shirts and maybe a lunch and someone else out there is getting a cook for a month. Damn right I'm taking the cook.

jokoon• 4 years ago

It's easier to break the rules of you create the rules

anonymousDan• 4 years ago

Fair play to this guy whoever he is. If only more people had his integrity.

cute_boi2• 4 years ago

He is an anomaly, and we are lucky that people like him exist. The system incentivizes pretentious, artifice people who trick people via skulduggery. And, M$ should realize that committing such unforgivable sins like corruption in Africa means they are responsible for hunger and poverty in Africa.

If the atrocities were committed by Chinese/Indian companies, the media would have vehemently criticized those countries and companies. But, as long as US and EU are involved media seems to be silent which I don't like.

tyrfing• 4 years ago

If the atrocities were committed by Chinese/Indian companies, the media would have vehemently criticized those countries and companies. But, as long as US and EU are involved media seems to be silent which I don't like.

That's ridiculous. Compare Ericsson to ZTE/Huawei, for example. Of course it'll get coverage in the US media though, it's mainly the US DOJ that will prosecute those foreign companies for bribery - not their own governments.

lemoncookiechip• 4 years ago

"What is a shock: This time around, the SEC and DOJ have both declined to investigate Microsoft over the same types of bribes in the Middle East and Africa. They acknowledged my evidence (which I submitted three times) yet did not take up the case, claiming that the current pandemic has prevented them from gathering more evidence from abroad—even though I have already provided documentation that I believe shows Microsoft is in breach of the 2019 agreement and is still participating in corrupt business practices in direct violation of U.S. law."

I have no words for this one. I guess being a trillion dollar company comes with a lot of benefits.

Source: https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

encryptluks22• 4 years ago

The same bribes/kickbacks are very big in government contracts. Not sure what the DoJ would do when they would up investigating themselves.

raincom• 4 years ago

With one major difference: in Africa, in general in the third world countries, whom to bribe, how much to bribe, who is the intermediary who handles the bribes, etc--are common knowledge. In the developed word, that is secret--only accessible to the super wealthy.

yonaguska• 4 years ago

The military industrial complex, and the intelligence communities are above the government. Investigations would never take place, unless they were fake and only to placate the public.

Lots of our dark foreign policy, is orchestrated through NGO's like the National Endowment for Democracy, where they then go on to do all kinds of illegal things in other countries. All is legal in the name of "national security".

thathndude• 4 years ago

To the extent the article gets anything wrong, it's the focus on just Microsoft. Microsoft is not some lone, bad actor here.

soperj• 4 years ago

Who cares? Start with the one they have evidence on and move on to the next one.

nopenopenopeno2• 4 years ago

How would that qualify as getting something wrong?

Overtonwindow2• 4 years ago

I work in government, and I remember a story told to me by a federal official who was involved in the arrest of a former member of congress for bribery. The official told me that, essentially what the congressman did was illegal under federal law, but it was what you had to do in order to "do business" in "those parts of the world."

I found that interesting. With what is going on today in the world, between nations committing human rights abuse and war, America still does business with them. Money exchanges hands, which furthers human rights abuses' and war because that's what our policymakers believe we needed to do to achieve our goals.

One is breaking the law to achieve a goal, but what is the other called?

igetspam2• 4 years ago

While in India once, I ran into a friend from Google who was out there trying to build a data center. Total coincidence that we were both there at the same time. I was there to hire and train for another company and he was there to break ground. He'd been there for week and they'd yet to start doing more than some bare minimums related to surveys and permits. I was surprised that he was there at all, given the current state of construction.

It turns out, they were way off target and they thought there was more progress already. Every time he spoke to anyone about permits and approvals, they'd say it was almost done and then there would be a delay. Amazon and Microsoft had been building in the area already and they had started the process much later. The difference? Google has a very strict policy on bribes. If you pay one, you won't be reimbursed and if they do and out, you won't be employed any longer. Microsoft and Amazon had no such policy and the conversations my friend had with his counterparts at those companies were pretty forthcoming about it. It's just how business is done there and if you don't play ball, you will have a hard time.

Of course they paid. You have to. If you don't, things will happen eventually but that timeline is unpredictable. I'm sure Google found ways to ethically encourage progress eventually.

mc325• 4 years ago

Are the bribes being directed by MS US or are these things taking place in overseas offices where customs are different? One example was Hungary --I imagine Ukraine and Nigeria too would have executives there who are part of the local culture where they do things differently.

While the actions go afoul of US law, they may be in line with local customs culture and practices --that is harder to root out as now you are trying to change another culture (cultural imperialism as it was called).

If this is being directed from the US, then it's easier to root out.

aeternum4• 4 years ago

Yes, a bribe in one country is often seen as just the cost of doing business in another.

In the US should tips be considered bribes? What if you tip at the beginning rather than the end in order to get better service?

vbezhenar2• 4 years ago

I live in Kazakhstan and while I don't have any evidence, I'm pretty sure that many huge western companies operating here bribed officials.

I don't think that's necessary part of local culture. Of course in poor country officials with $200/month salary are happy to get $1000 gift for signing $100 000 agreement. Western companies are huge part of corruption source here. That's my opinion.

I've heard that Ikea decided not to bribe officials, so they didn't get approval to build their shops here. I kind of applaud them if that's true and I wish every so-called civilized company took that stance. But money doesn't stink I guess.

wpietri2• 4 years ago

It doesn't matter. For US persons and companies, it's always illegal.

Here's the official page: https://www.trade.gov/us-foreign-corrupt-practices-act

Here's the Wikipedia article: https://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act

And here's a detailed look at one particular project, a Trump project in Azerbaijan: https://www.newyorker.com/magazine/2017/03/13/donald-trumps-...

markdown6• 4 years ago

While the actions go afoul of US law

LMAO, surely you jest! The US is one of the most corrupt societies in the world. Where else is it not only accepted practice, but enshrined in law with "money is speech".

Please see https://www.fec.gov/ (BWAWAAHAHAHHAH, this is an government website listing bribes... they don't even have to hide it!). See also, https://opensecrets.org/.

KingOfCoders• 4 years ago

While working as an executive for eBay in Germany, the company made it totally clear on many occasions what illegal behaviour is and that they would take action. And the standards were the higher US standards not the lower German ones.

reincarnate0x142• 4 years ago

More likely that Microsoft learned a very good lesson from their 1990s encounter with the DOJ, but it wasn't the hoped for "stop doing illegal and unethical things" but instead "make more and better targeted political contributions."

slim• 4 years ago

and share data with 3 letter agencies

SubiculumCode• 4 years ago

Corruption does terrible things to a society. I look at how Russia, Mexico, Greece and others were/are absolutely crippled by wide-spread, run-of-the-mill corruption at all levels of government. We have always been our best in the USA when corruption has been the least prevalent. The "legalized bribery" from campaign donations and regulatory capture, while not as bad as in those other countries, does not do our system justice.

snarf21• 4 years ago

This is what life in an oligarchy is all about. Now, back to checking how much the S&P 500 is up today.

jollybean3• 4 years ago

Why would anyone be shocked?

This is how business is done in most of the world.

If it's a 'standard practice' - then it is 'accounted for' and effectively part of the equation.

How else do you think think the states vast wealth trickles out to it's citizens?

The $10M Bribe to the Minister of Education goes t pay for the construction of his Mansion, staff, services.

What 'mostly matters' in these kinds of situations frankly is de facto transparency and efficacy.

If the ration are 'understood' and actually well-strutted, then there's a kind of de-facto transparency. In the case of a rich state like Qatar, it might actually be better than simply having nothing.

You could argue the 'lack of competitiveness' from MSFT bids given alternatives, but in many cases it really might not matter, the 'winner' was a fait-accompli anyhow.

When this is Nigeria, and the state is providing it's citizens with nothing, then it's much more of a problem.

I should also note that this is a function of the regional system, not MS.

MS is playing the game that's handed to them. Their alternative choice is to pull out of all of those markets, and hand them over to other businesses who operate that way.

The 'problem' should mostly be directed at state agencies setting up the system.

There should be more analysis and journalism on this kind of stuff, particularly because it does happen in countries wherein 'regular people' do end up paying the price, but the focus should on the agencies, not businesses who would otherwise play fairly.

This is a nuanced issue and we should not be 'shocked and horrified' by it, this almost implies a serious kind of naivte.

We need to recognise that it's complicated before just trying to 'blame MSFT'.

Kankuro• 4 years ago

US authorities don't investigate about MS (hopefully they will), but they use the extraterritoriality of US laws to sue foreign companies who corrupted in a foreign country. The French company Alstom (rolling stock and gas/nuke turbines manufacturer) was prosecuted for corruption… in Indonesia [1]. I'm all for fighting against corruption everywhere, but here it looks like the case was allegedly used to force to sell the power division to General Electric. These turbines are used by the nuclear plants in France, so they are quite critical and could have been used by the US authorities to negotiate something with France. I would have preferred if those guys were sued in France in the first place.

[1] https://en.wikipedia.org/wiki/Alstom#Judicial_troubles

softwarebeware3• 4 years ago

Meanwhile ... the SEC and DOJ are in a backroom meeting with Microsoft with their hands out for more bribes. :)

encryptluks22• 4 years ago

I think almost with any common sense would recognize this. It happens a lot in the US as well and in academia, but most of all government services. People get kickbacks, Microsoft helps with marketing... so and so switched to Microsoft, here is what they have to say about how it helped the organization. Except, they never talked to the employees who would have told you how they hate it and it actually makes their jobs worse. People realize they are powerless and just leave or accept it as a normal part of business and the practice continues.

civilized• 4 years ago

Microsoft spokesperson: "how dare you single us out, obviously everyone is doing this"

johnny_canuck• 4 years ago

The headline reminded me of the SNC-Lavalin affair in Canada https://www.reuters.com/article/uk-snc-lavalin-court-idUKKBN...

cute_boi2• 4 years ago

They also have habit of saying, "If we don't do this, Chinese company will do this and so what we are doing is clearly a benevolent act on humanity. To erase this blemish Microsoft shall donate 5 computer to Nigeria to help those poor kids to draw something in MS Paint"

Qem2• 4 years ago

My work involves a public sector organization in Brazil. In the last years there was a big push towards microsoft products at my workplace, to a point where emails with announcements from corporate IT sometimes looks and sounds like spam pushing MS products. Now I'm left wondering if that's related to bribes here too, or if it's just bad judgement/taste from IT leadership.

rapsey2• 4 years ago

MS is insanely powerful pretty much in every country in the world. They know damn well how to get into the power structures.

mschuster91• 4 years ago

They just had the advantage of having the only viable GUI-based OS on mass market computers. Linux has only begun to be usable on the desktop around 2005-ish, Mac always was expensive because you had to buy Macs.

hulitu4• 4 years ago

It is the same also in some automotive company.

goodpoint2• 4 years ago

It's well known that Microsoft has been giving bribes even to small companies for many decades.

The entity of the bribes from MS are above average.

tombert3• 4 years ago

Is it considered a "bribe" if it's a transaction between private companies? I would think that's just considered a "discount" at that point.

Not saying it's right, I'm just saying that I thought there might be a legal distinction.

mistrial92• 4 years ago

it is well documented in the 1990s antitrust documents against Microsoft Corp. that attorneys under contract with Microsoft, paid money to senior management at the Brazilian national phone system to adopt Microsoft Office as standard, and remove any other system internally, IIR

seanmcdirmid4• 4 years ago

Now I'm left wondering if that's related to bribes here too, or if it's just bad judgement/taste from IT leadership.

Usually the latter, often it is just marketing, but you can never discount the former, and the lines are often blurred.

wolverine87617• 4 years ago

Microsoft products for large institutions are very popular; they don't need bribery (or even bad taste).

rbanffy2• 4 years ago

No need to wonder. Of course it's bribery. Most likely not by Microsoft, but by their local VARs, with tacit corporate approval.

All the blood, sweat and tears we gave during the early 2000's to make FLOSS the standard, how we advocated for it on grounds of openness and auditability, how it would - and did! - help foster a local industry... All this work and see it being undone by the current government and their cronies.

As a note, São Paulo state, where I lived, was a very reliable income source for Microsoft.

Qem2• 4 years ago

Truly sad. Even if eventually FLOSS regain traction in the Brazilian government, I think it will be trickier to extricate government data and systems from proprietary blackboxes this time, when compared to the 2000's. I think Microsoft is making their products interlocking more tightly between themselves, so it's harder to fight lock-in by replacing one piece at time. Now it's becoming like a card castle that will crumble if you try to pull any single card.

adhesive_wombat• 4 years ago

A bit like any time a local government makes a concerted effort to move to Linux, suddenly Microsoft magically finds a way to deeply discount Windows and Office just for them.

marcosdumay• 4 years ago

The old rule about having to justify acquiring proprietary services or using proprietary formats disappeared. It was there by decree, so it could vanish from one day to another.

The rules about open formats for data disclosure are written in law, and the decrees about data interchange require open formats too.

As a consequence, the most people-facing roles of governments reverted to old habits (or maybe there were bribes involved, I wouldn't know, but it surely didn't require bribes, those people never stopped using Word for everything), while the more central roles are migrating into web-systems and open formats.

Dracophoenix• 4 years ago

I reckon Microsoft and others haven't learned from Lockheed in the 70s. It'll only be a matter of time before we hear about other charges regarding Apple and Google

azemetre• 4 years ago

What is the lesson you're alluding too?

FourHand451• 4 years ago

There are a few:

https://en.wikipedia.org/wiki/Lockheed_bribery_scandals

dukoid• 4 years ago

Every generation has to re-learn this lesson? https://en.wikipedia.org/wiki/Lockheed_bribery_scandals

topspin• 4 years ago

Has it been one full generation since the SEC was handed evidence of fraud (Madoff) and blew it off? That was only 14 years ago.

spaetzleesser4• 4 years ago

It may be that they have learned from Lockheed and tried to do the bribes in a better way.

Shadonototra• 4 years ago

I knew it, their only way to push their services globally was to resort to that kind of behavior with dirty money

legalcorrection3• 4 years ago

The Foreign Corrupt Practices Act should be repealed and American companies should be allowed to compete on equal footing with their foreign competitors. No other country, even if it technically has an FCPA-like law on the books, actually enforces it to the extent the US does. It means that everyone is free to openly participate in bribery to win foreign markets, markets where bribery is just how business is done, while American companies have their hands tied behind their backs. This has overall been a major hamper on American competitiveness while being a huge boon to middle-men and white collar criminal defense lawyers who specialize in working around the laws and defending against prosecutions.

mring33621• 4 years ago

I don't like it but I think this is a realistic opinion.

Maybe overseas bribes become legal, but must be disclosed in a publicly-accessible format.

otterley6• 4 years ago

Do you think our laws should be tuned for maximum profit, or to reflect who we are, ethically and morally, as a society?

fallingknife3• 4 years ago

From a moral standpoint I think we have to accept how other societies are run and act accordingly, and our laws should end at our borders.

legalcorrection3• 4 years ago

It's not about our laws, it's about their laws. Whether bribery is legal or otherwise tolerated seems to be a question properly for the country whose officials are being bribed. It may be hard to imagine, but this is just how it works in some countries. They don't pay their public officials enough, and everyone expects that they pad their inadequate official salaries with corruption. I certainly wouldn't want my country to be run that way, but it's just how some societies work.

Yes, the bribery is technically illegal in most of those countries, but thinking that is is of primary importance is mistaking western legalism for a universal ethos. In many other places, the technical requirements of the law are much less important. The real law in all cases is what is actually practiced, which in these societies can be quite different from what's on the books.

fallingknife3• 4 years ago

Yes. It's not our governments job to prosecute foreign bribery. It's the foreign government's job. And if they don't do their job, I don't see how that's my problem.

Quarrelsome• 4 years ago

that stank flows upstream which is why we want it stamped out.

cjbgkagh3• 4 years ago

In my view that law is to protect very big US companies that pay the middle men from the smaller US companies that don’t.

spaetzleesser4• 4 years ago

I am against that. The result could be that US companies would go all in on bribing and make the countries even more corrupt. It would make the US even more hypocritical when they preach ethics to the world.

InitialLastName• 4 years ago

Perhaps (and I recognize that this is controversial) the US should reconsider its habit of preaching ethics to the world.

Zigurd• 4 years ago

To do so would be to invite a large increase in corruption in businesses within the US.

Rury2• 4 years ago

No, this reeks of putting money over ethics, and would likely increase corruption in the US. IMO, we shouldn't do business with countries via practices we view as corrupt, even if we were following their laws and would mean losing their business.

nashashmi3• 4 years ago

There is a lot of supposition from the article based on a single source that these payments were bribes. These kinds of articles are really calling wolf when there are none. And potentially downplay instances when actual wolves are spotted. This is a hit piece from a potential competitor trying to do business in the same market.

Going to add further the article has way too much fluff. It’s a play on reader psychology to turn them against Microsoft.

hammock• 4 years ago

Agreed. Reminds me of the payments of as much as $183K a month from a Ukrainian natgas company to a man with no energy sector experience that just happened to be the son of the US Vice President. There's no evidence it was a bribe, just a hit piece, probably from a competitor like Russia

nashashmi3• 4 years ago

Hilarious.

hirako20002• 4 years ago

Did you mean former vice president? his father got a new job last year.

digisign2• 4 years ago

What kind of payments should vendors be making regularly to customers?

nashashmi3• 4 years ago

Accounting malpractice is a common problem in non western nations. Negotiators will personally take money in name of their employer.

gjsman-1000• 4 years ago

I wonder if this explains the shocking incompetence of the Windows division...

jonpo• 4 years ago

Ohh man my ESG ETF is suddenly evil..

svachalek• 4 years ago

I was very interested in ESG until I saw that pretty much all ESG funds had Facebook in the top handful of holdings. Because they're easy on the environment compared to an aluminum smelter, and somehow destroying democracy around the world doesn't count as a social or governance issue. I've changed my focus to owning shares via funds that will vote my shares with some sort of conscience. (Vanguard is the rock bottom on that metric, btw.)

Nextgrid• 4 years ago

Vanguard is the rock bottom on that metric

Could you recommend alternative funds that are more ethical?

npteljes2• 4 years ago

What difference did the article make, compared to this below?

https://en.wikipedia.org/wiki/Criticism_of_Microsoft

bnt• 4 years ago

Let's see how The Verge falls out of Microsoft's grace moving forward. The Verge had (what feels like) direct access to top MS execs for all product launches. I guess those days are over.

Don't get me wrong, if this was picked up by the SEC or DOJ - I'd take it more seriously, but it sounds like accusations with no real proof.

tombert3• 4 years ago

Wouldn't that be evidence that they have less reason to lie about this? This is potentially burning a bridge, which could potentially cost them financially long term.

boomboomsubban• 4 years ago

Will MSN also fall out if Microsoft's grace? https://www.msn.com/en-us/news/us/microsoft-allegedly-connec...

xbmcuser• 4 years ago

Western countries look the other way when their companies exploit poor countries. Then let the same corrupt money to be be taken out from those poor countries and hidden in their banks and property markets. Microsoft is not alone in this many other companies do the same. I personally feel the biggest hate from the west for the chinese so called road and belt initiative is not that China is exploiting these countries rather China has pushed them out and taken over their scam.

president• 4 years ago

Well there is a geopolitical perspective to this as well right? Wouldn't want our biggest adversary to have strategic influence over these nations. Not to mention the potential intelligence capabilities from installing our equipment rather than theirs. Whether one country is more righteous than the other doesn't matter at this point - you should be rooting for the country that your survival depends on.

bllguo• 4 years ago

at least you're honest, most people don't get this far. but doesn't make your stance moral, I cannot justify keeping poor countries poor because of petty concerns like "we must remain #1"

wolverine87617• 4 years ago

People like to imagine that international relations are completely amoral; it's a sort of thrilling, Game-of-Thrones type fantasy. But that's not the case at all.

Look at the EU, NATO and other US alliances (e.g., with Japan). They are connected held together by values. They are very imperfect and corrupt, but these alliances have lasted so long because there is no way, for example, Germany is attacking France again. It just doesn't make any sense, because of the values.

International relations are fundamentally (but certainly not wholly) anarchy, but anarchy doesn't exclude values - perhaps it makes them even more powerful, relatively. As some have said, to a great degree, right makes might.

In practice, blowback is one result of ignoring it: The US supported the Shah, a brutal dictator in Iran. When the Shah lost power in ~1979 - well, you can see that the US is still paying a price. The US supported some unsavory people to fight the Soviets in Afganistan; some of those people became Al Qaeda. The US armed and trained brutal right-wing militias in Central America to suppress enemies; some of them became today's Central American drug gangs. Meanwhile, while the US promotes democracy and freedom, it draws many, many into its orbit around the world.

wolverine87617• 4 years ago

Then let the same corrupt money to be be taken out from those poor countries and hidden in their banks and property markets.

Coincidentally, here is an article that very issue in US property markets:

https://news.ycombinator.com/item?id=30805296

digisign2• 4 years ago

Reminds me of this great piece (and hn discussion) regarding corporate bribery during the Watergate years:

https://longreads.com/2018/11/20/the-second-half-of-watergat...

https://news.ycombinator.com/item?id=18498796

This reads as the modern chapter to the story.

spaetzleesser4• 4 years ago

I bet this is normal procedure for most companies that do business in countries where bribes are common. In Germany foreign bribes used to be even deductible.

worik9• 4 years ago

It is arguable that the prohibition of bribes is a cultural thing.

So insisting on not bribing in other cultures is some sort of "imperialism".

That would make bribing foreign officials a "legitimate" business expense.

spaetzleesser4• 4 years ago

Problem is that foreign entities bribing in foreign cultures is an even worse form of imperialism. Big corporations with deep pockets could totally distort the market in these countries by bribing generously instead of competing by merit. It’s bad enough that lobbying (some may call it bribing) money plays such a big role in US economic policy so let’s not make it even worse. Especially large scale bribing corrupts countries and their culture.

Capitalism is only useful if there is honest competition in the market.

wolverine87617• 4 years ago

If bribes are ok, why don't the criminals openly advertise their prices and what they are doing?

Bribes do economic harm to people of the country, whether we call it 'culture' or something else.

npteljes2• 4 years ago

This is my takeaway too. Want to do business at a country where this is normal? You either play this game, or do do business there with a serious disadvantage. In this regard, it's not that different from visiting places like this as a tourist. Where bribes are common with border guards, cops stopping you in the middle of nowhere, etc you either go there and pay the bribes, or don't visit at all.

sgm_ro• 4 years ago

This has been common knowledge for me for a long time, after this case surfaced in the media here in Romania: https://en.wikipedia.org/wiki/Microsoft_licensing_corruption...

Pretty much all of the public system uses windows as OS, and most of the times it's just to use a browser to access a webapp. But there are actual windows lock-ins (due to people training and existing workflow/infrastructure that has no incentive to change), such as MS Office and Adobe Reader.

So there was no reason for Microsoft to bribe decision-making people to use windows, windows was already firmly locked in, they did it just so they can overprice licenses and for them to accept leased licenses instead of a permanent one time pay windows license. Big win for MS and bribe takers, big loss to common decency and public spending availability.

A sign of a healthy democratic government can be seen in the decisions to build future public software infrastructure on open source technology, and use Linux as client/server OS (as it's pretty much the only other alternative offering similar ease of use/maintenance/compatibility with existing software).

edit: wrote this to show it's not necessarily the cost of doing business, in most places, because the software ecosystem is already locked in and can't be replaced overnight and without considerable spending. It's just the cost of extracting more public money. And sometimes it's the cost to keep the business safe from decisions to steer towards Opensource: https://en.wikipedia.org/wiki/LiMux

1024core• 4 years ago

The only way to stop this is to give the whistleblower a large cut of the fine: say, 50%. That will drive up the incentive to whistleblow; otherwise, all you get is a pink slip and a spot in the soup kitchen line.

boeingUH60• 4 years ago

The US SEC started a similar program in 2012, but with a smaller cut (10-30%). It's been quite successful, with $1 billion+ in whistleblower awards so far

https://www.sec.gov/news/press-release/2021-177

peter_retief• 4 years ago

Billions get paid to Microsoft from countries with starving people. This has always upset me and I do not use Microsoft.

Gepsens• 4 years ago

Foreign companies get fined billions for doing the same when it doesn't please Uncle Sam...

DoneWithAllThat• 4 years ago

I’m disappointed but not surprised that the title is editorialized. It specifically leaves off “whistleblower alleges”. It’s literally one disgruntled former employee claiming this. But as usual for HN these days a tiny populations claim - in this case a population of one - is stated as fact.

treis2• 4 years ago

The piece written by the whisteblower includes links to documents:

https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

hn_throwaway_99• 4 years ago

I think this is an excellent document that should really be the main article.

One of the things I think this really highlights, and that absolutely infuriated me during the Trump impeachment hearings, was that categorizing a whistleblower as a "disgruntled former employee" does not negate the evidence that they show of malfeasance.

I mean, of course whistleblowers are usually disgruntled about something, but a major point of whistleblower protection laws is that the motives of the whistleblower do not matter. To the GP comment's point, it's true we shouldn't just take accusations as proof, but the whole role of a whistleblower is to provide the "thread" that investigators can then pull on to get detailed evidence of what was going on. And, given the links to documents in the above post, I think this looks really, really bad for Microsoft.

sha256sum• 4 years ago

What’s your point? One whistleblower alleged the NSA of the US was illegally conducting bulk surveillance across the entire world, including its own citizens. A court later ruled this program was illegal and unconstitutional.

Are you saying we should discount all whistleblowers because it doesn’t fit some preset narrative?

stickfigure• 4 years ago

Not the parent, but I'm saying we shouldn't rush to judgement based on an accusation. Not everyone is Edward Snowden.

pcurve• 4 years ago

Bribery is pretty common. In many countries you almost cannot do anything without greasing wheels. My Father was a head of publicly traded pharma. Stories he had about China and India in particular were fascinating and sad at the same time. One time he was told that somebody dumped a huge pile of paper trash in front of his newly opened drug packaging facility in China. He investigated to find there culprit. It turns out it was from a paper factory owner nearby. Asked why he did it, his answer was : “you didn’t use my company as your paper supplier”. My fathers response: “how was I supposed to know there was a paper supplier nearby!! And why didn’t you come and introduce yourself before ?!?!”

He ended up using the supplier and they did haul away the mountains of trash.

qiskit• 4 years ago

Did you expect an army of whistleblowers? Aren't most whisteblowers solitary and generally disgruntled former employees? Your first point has some merit but is diminished by your attack on the whisteblower. Whistleblower laws exist to encourage disgruntled employees to expose wrongdoing in corporations/governments/etc. Not sure why you are so quick to dismiss the whistleblower in this case.

marricks• 4 years ago

Fridays are the days most interesting news lands because it’s easiest to sweep it under the rug with the weekend.

I wish news organizations where more courageous and held on to this stuff to Monday/Tuesday.

twblalock• 4 years ago

Waiting several days to publish news is not courageous -- it's just late.

The public expects news organizations to publish the news as soon as it's known.

softwarebeware3• 4 years ago

Looks like it was "..the whistleblower platform Lioness.." that released it today. Interesting that you point out it would have been more effective in the news cycle if it had landed another day.

Perhaps this is a case of Hanlon's Razor and the whistleblowers need to get more savvy.

ziml77• 4 years ago

Wouldn't people be more likely to see something in the news on a day when they're not busy with work?

beeboop• 4 years ago

General usage patterns across the internet usually show a decline in use on weekends.

Woodi• 4 years ago

So, MS was hacked day or two ago and damage control appears already ? :>

markdown6• 4 years ago

Not just foreign bribes:

https://www.opensecrets.org/orgs/microsoft-corp/summary?id=D...

bstar77• 4 years ago

And much of this is to convince governments to not go open source. This kind of behavior is part of Microsoft's DNA.

sakex2• 4 years ago

Bribing in Africa is so common it could be considered a business practice

notriddle• 4 years ago

That's an essential part of it.

"We ordered them to not accept bribes! Never mind that we also ordered them to somehow convince these governments to run licensed copies of Windows instead of cracked copies, and since it costs them money while buying them nothing, the only way it could possibly be done is bribery. It's not our fault because we told them not to!"

datavirtue3• 4 years ago

And in many other parts of the world. It is so bad that businesses in n the US did adopt it as a practice. The ballooned to such epic porportions that the US Senate sponsored a bill to make it in illegal. If it had been kept down to a mild roar the law would still be missing from the books.

It is still bad because the incentives are still in place. Throw a little bit of money at a few people, get your business locked in. If you get caught you pay a very small portion of the profits and get to keep your business deal in place.

The fines are a joke, and the rules are indeed for the little people.

carapace• 4 years ago

I worked briefly for a startup that wanted a .sy domain. That's Syria. They had to get the State Dept. involved (Hillary Clinton had to sign one of the documents, she was Sec. of State at the time.) The package they sent to Syria was a kind of Matryoshka doll: a package with some grease (cash!) and another package inside, that in turn had the grease for the next level of the bureaucracy and another package for them to pass on, which contained more grease and another package... All in all four or five layers of payments and bureaucracy. They got the domain name but then abandoned it for some reason I don't know (I suspect it was just more trouble than it was worth to have "foo.sy" and deal with Syrian government rather than just "foosy.com".) US$20,000 down the drain. FWIW this was all official enough that it wasn't legally bribery.

hulitu4• 4 years ago

It is not limited to Africa. First world countries like to call it with a different name: lobby.

sakex2• 4 years ago

True, insider information is another big one

locusofself• 4 years ago

Jesus do you know how many training videos about anti-corruption and bribery I've had to watch as an MS employee?

lkxijlewlf2• 4 years ago

I am just so sick of all the cheating. Every time you turn around, some business, politician, or wealthy person is corrupt as f** and everyone who can do anything about it won't.

datavirtue3• 4 years ago

It's almost as if the people should form a more perfect union.

wolverine87617• 4 years ago

What are you doing about it? It's a democracy - like open source software, if you don't like it, change it.

hulitu4• 4 years ago

It is not a democracy. It is a corrupted democracy.

lkxijlewlf2• 4 years ago

Funny who always gets stuck with the burden.

softwarebeware3• 4 years ago

Kudos to Yasser Elabd! This man sounds awesome.

This part particularly stood out to me:

When he refused a performance improvement plan, he lost the job and left Microsoft for good in August 2018.

I didn't know you could refuse a PIP. TIL

tstrimple• 4 years ago

You can do whatever you want if you don't mind losing your job.

mupuff12344• 4 years ago

If a government organization would want to use a Linux, how hard would it actually be? Is it a viable alternative?

pid-12• 4 years ago

I don't think govs are different from your average company.

Having a Linux based business is hard, for a few reasons:

- Destkop Linux sucks

- You need experienced sysadmins. There is no Linux equivalent to AD / Azure AD in terms of simplicity, as far as I know. Also true for other stuff like app management.

- User resistance, as few people use Linux as their daily OSes

mupuff12344• 4 years ago

I wonder if we will see a push from Google with chrome os.

nivenkos• 4 years ago

But on the other hand they have a much bigger incentive than a company to be able to have a system they control and can use throughout different public administrations.

worik9• 4 years ago

Desktop Linux does not suck.

It has not sucked since about 1993

If you compare Linux 1993 to Mac SO 2022 it still stacks up, almost.

Comparing Linux 1993 to MS Dos of the time is unfair.

It took MS till about 2000 to be able to compete with Linux on quality

MS Windows was successful for other reasons than the operating system.

EnKopVand2• 4 years ago

I spent 7 years working with digitalisation in the Danish public sector and it depends on what you mean, and what you want to pay for it. Basically the short answer is that it is impossible.

What is often forgotten about non-tech enterprise here on HN is that a typical public sector organisation has a ratio of 20-50 IT people (this is everyone, from the network and operations people to developers and project managers) per 10.000 employees in organisation where almost every employee uses some form of IT system to perform their duty.

Some users will not be capable of telling you if they are on an iOS or Android devices, and almost all of them know Microsoft Office and Outlook because that is what every place they have ever worked and will ever work uses. Or to frame it differently, the change management and retraining of 10000 employees is going to crush you, very, very quickly. On top of that your IT staff is certified and trained with Microsoft technologies, and most of them are likely happy about that to the point where they will leave your organisation if you push them toward Linux.

That is the employees. There is also the technology, and all the IT systems that only works on windows and have no competitors. This can be everything from your million dollar MRI machine to the dentist program (dentists are part of the public sector in Denmark). Cutting ties with Microsoft completely, would mean you’d need someone to develop alternatives to these things. (Yes, your million dollar MRI machine shouldn’t depend on windows XP, but it does).

So obviously it’s not impossible, nothing is, it’s just really, really, expensive. It’s so expensive that it will likely be it would be political suicide because the money you need to pay for the transition is going to come from firing nurses, school teachers, and other primary functions.

That being said, a lot of public sector organisations do take open source seriously. Especially here in Europe. But there isn’t a clean way to cut ties with Microsoft, and it’s actually become harder and harder. Because where is the Linux alternative to office365?

Disclaimer: I consider Microsoft to be the best external business partner that I’ve worked with while I was in the public sector.

mupuff12344• 4 years ago

How many native windows apps are being used?

It sounds like it's always gonna be a messy migration, but I wonder if you can somewhat simplify it by moving all users to web apps? Basically as an intermediate transition step to first decouple usage from the underlying OS.

madsbuch• 4 years ago

I do use Office365 on linux, I even develop Office plugins under Linux. So it would seem like a transition to cloud software would be the enabler of Linux based operating systems?

AlanYx• 4 years ago

The other challenge in the public sector is that the "business" itself is so heterogeneous that the IT management tends to be siloed, while people in these siloed orgs need to work with people in other siloed orgs. You can't switch the whole government wholesale; you'll get some fraction of business units to adopt something else and hope other units will slowly switch too, but in the meantime, you've got people trying to share documents with some intricate set of track changes, comments or some other special feature across orgs using different tech, and the roundtripping with different software causes some of that to be messed up and then you've got an ongoing IT support problem and dissatisfied stakeholders.

rirze• 4 years ago

Didn't Germany at one point, try to do this? I'm not sure if they still are using Linux.

Also certain Chinese agencies are most definitely using custom distros.

jjkaczor2• 4 years ago

Yes, Germany did do this for a few years.

And the Microsoft came calling again - guess what they use now?

It is the example I used to tell clients about how if your organization is big enough, publicly visible enough and open to being in the news/or a case study) and has great lawyers, you can probably get Microsoft licensing for essentially "free".

And those "nearly free" licenses will increase over the next 2-5 years.

The cynic in me says that Germany did this to get better bargaining leverage with Microsoft...

(Apparently they are cycling around back again, over the last couple years trying to transition away from Microsoft for some states/groups/municipalities within Germany)

DoingIsLearning• 4 years ago

It was the city of Munich [0], not the entirety of Germany.

I think there is also Vicenza in Italy where the municipality is using Zorin Os. [1]

[0] https://en.m.wikipedia.org/wiki/LiMux

[1] https://itsfoss.com/vicenza-windows-zorin/

hulitu4• 4 years ago

Didn't Germany at one point, try to do this? I'm not sure if they still are using Linux.

Well Gates made a "visit" in Münich to "convince" them that windows is better.

fartcannon• 4 years ago

Not hard technically, but hard because people associate free things with cheap and there's a lot of experience momentum that really upsets people if they think they're being forced to do something even slightly differently.

And yes it's a viable alternative and has been for decades.

cryptica2• 4 years ago

"they’re promoting the bad people. If you’re doing the right thing, they won’t promote you."

I can relate to this. Seems to be an industry-wide phenomenon. It probably explains what's going on with the world.

cryptica2• 4 years ago

We have to abolish corporations. Nationalize them. The concept of an entity which spares directors from liability is ridiculous... It's a financial instrument designed for scams and nothing else.

daniel-cussen• 4 years ago

Couldn't bribe North Korea. I can't believe Juche actually worked.

LorenPechtel2• 4 years ago

Unfortunately, we are left with the problem that it can be very hard to tell the difference between a bribe and a grease payment. The latter are an unfortunate reality that companies can't realistically function without--and not just in the third world.

beaconstudios2• 4 years ago

They're the same thing.

LorenPechtel2• 4 years ago

No.

A bribe is a payment to get them to do something improper.

A grease payment is to get them to do what they should have done anyway.

They look the same on the surface but they're very different underneath. The former is illegal, the latter is legal (but good luck trying to show it's not a bribe when it happens in the US.)

jnwatson• 4 years ago

To be clear, this is not (just) a matter of ethics. If true, these acts are in violation of the US Foreign Corrupt Practices Act. Each violation can be up to 5 years in prison.

chrismcb• 4 years ago

I like how there is a ton of commentary on how to skip ethics training. If you are thinking of skipping ethics training... That training might be targeted at you.

will_walker• 4 years ago

Primary complaint document:

https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

worik9• 4 years ago

I have been reading the comments about bribing foreign companies. Very interesting

I think it is pertinent to remind people here, especially subjects of the USA, that in the USA bribing politicians is a formal and accepted practise. Records are kept, they are publicly available.

The hypocrisy of those politicians is legendary for all sorts of reasons, this is just a minor point. Bribery is only illegal if done informally in foreign countries or the private sector.

taxyz232• 4 years ago

This is very misleading particularly for those not familiar US laws. If you want to say publicly disclosed campaign contributions with no quid pro quo is bribery than say so but that's not most people's definition of bribery. Democracy requires campaigns and campaigns require money.

worik9• 4 years ago

If you want to say publicly disclosed campaign contributions with no quid pro quo is bribery than say so but that's not most people's definition of bribery.

No. It is the "I will vote for this law if you contribute this much". In my country (New Zealand) that would get you jail time. Because it is bribery

4oo4• 4 years ago

If Microsoft can get away with this, what are the rest of the FAANGs doing that we don't know about?

So nice that we legalized corruption and white collar crime in the United States, how disruptive!

say_it_as_it_is• 4 years ago

Why do Americans think that the rest of the world operates according to the illusion that America pretends to follow? Payoffs aren't always bribes. They're more like a tax.

xtracto• 4 years ago

Right... the PACs SuperPACs and other payments from private companies to lawmakers would be highly illegal in my country. Yet in the USA they are promoted and celebrated.

madrox6• 4 years ago

I was prepared to get my pitchfork out, but after reading I'm struggling to connect the dots. This article is scant on details of what illegal or favorable behavior Microsoft is expecting in exchange for money. The only concrete mention is a previous SEC filing that has nothing to do with this whistleblower. The first example about $40k doesn't seem to explain what Microsoft was actually thinking it would get for that money, let alone whether that money was illegal. At worst, it seemed to violate corporate policy, which I can understand if that got missed in an initial review. The other examples don't sound like bribery on Microsoft's part so much as resellers squeezing as much out of a deal as they can get away with. I call that a problem with the reseller model.

I imagine Microsoft looks the other way while resellers make lots of money because, realistically, being in some of the markets mentioned is impossible unless you're connected with the right person. While not necessarily efficient, I wouldn't call that illegal or even unethical without a lot more detail than this article provides.

But maybe I'm missing something. This article reads as poorly researched, and the whistleblower comes off as disgruntled more than ethical.

Edit: It's worth noting that the whistleblower's original words are a little more well-written than this article [1]. However, it makes the contrast clearer between what is factual vs what is only insinuated.

1: https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

jamal-kumar• 4 years ago

An Overview

The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA"), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.

Since 1977, the anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.

The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. See 15 U.S.C. § 78m. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.[1]

I'm not a lawyer, but at worst it's starkly clear to me that this runs afoul of the law. Might I suggest it may be the awareness of it is the something you are missing?

https://www.justice.gov/criminal-fraud/foreign-corrupt-pract...

madrox6• 4 years ago

You'll need to draw that line a little clearer, because it's not starkly clear to me. I'm aware of the definition of bribery. I don't think anything mentioned here describes graft as much as it describes the reseller business unless there is some law that limits the amount of money a reseller makes on a deal, or that a purchaser is required to use all of said purchase. In the Saudi example, the contractor got a great deal, but that's hardly illegal. In the Qatar example, buying more seats than you use is a common problem and any company that sells based on seats is guilty of this on some level.

For me to take this farther than "that's how reselling works," there'd need to be some signs that Microsoft employees or government officials were seeing kickbacks from these inefficient deals...basically, the resellers were the ones doing the bribing. The whistleblower seems to be insinuating that's happening, and maybe it is, but there's no hard evidence of it here or that it's something systemic that Microsoft is promoting (indeed, Microsoft would be one of the victims in that case). Without more detail on what exactly Microsoft was extracting out of these circumstances I find the whole thing vague.

hedora3• 4 years ago

Allegedly, a foreign employee of Microsoft bribed a foreign official off US soil. The transaction was reported to accounting and controlled by some budget, and no one in the US was aware of the bribery. Which rule was broken, and by which person under the jurisdiction of the law?

The same article says to maintain counsel or ask the DOJ for advice if you want to operate in a gray area of the law, implying such behavior is common.

Last I checked, Microsoft had an army of lawyers and also a good relationship with parts of the DOJ.

areoform2• 4 years ago

It's not "resellers" making money, it's apparent that MS' employees and salespeople are using fake contracts and "discounts" to funnel money to decision makers. What MS got out of it at the end of the day — a contract or perhaps some personal earmark for a salesperson — doesn't matter. Their bribes distorted the market, entrenched corruption, and made the lives of people living in these countries worse. It should be punished to the fullest extent of the law.

This section in particular is damning,

In another instance, he saw a contractor for the Saudi interior ministry receive a $13 million discount on its software — but the discount never made it back to the end customer. In another case, Qatar’s ministry of education was paying $9.5 million a year for Office and Windows licenses that were never installed. One way or another, money would end up leaking out of the contracting process, most likely split between the government, the subcontractor, and any Microsoft employees in on the deal.

These "subcontractors" are usually relatives of people in Government, and they're bribing these officials, then splitting money between all of them in exchange for contracts. This is illegal under the Foreign Corrupt Practices Act.

The whistleblower wrote a post detailing his accusations here, https://www.lioness.co/post/microsoft-is-using-illegal-bribe...

These provide even more color.

In 2016, a request came through in the amount of $40,000 to accelerate closing a deal in one African country. [...] On top of that, the partner in the deal was underqualified for the project’s outlined scope, and he wasn’t even supposed to be doing business with Microsoft: he had been terminated four months earlier for poor performance on the sales team, and corporate policy prohibits former employees from working as partners for six months from their departure without special approval.
I brought these issues up with the Microsoft services architect who wrote the request, asking why she didn’t take the work in this case to our very capable in-house team, Microsoft Services. She said our in-house daily rate is very expensive, and she needed a less expensive team to handle the pilot.

and then,

Meanwhile, the woman’s manager sought me out, angry that I had bypassed him; I told him I was only following company policy. Soon after, he was promoted and became my manager. He immediately scheduled a one-on-one meeting, in which he told me our job is to bring as much revenue as we can to Microsoft. He added, “I don’t want you to be a blocker. If any of the subsidiaries in the Middle East or Africa are doing something, you have to turn your head and leave it as is. If anything happens, they will pay the price, not you.” When I said I would not block anything unless it violated company policy, his tone took a sharp turn. He shouted that I was not capable of doing this business and couldn’t close deals. But my 18-year track record spoke for me.

He escalates, but no one does anything, so he writes to the CEO.

The aforementioned vice president immediately got back in touch with me, to say that by escalating the matter to Nadella, I had just “booked a one-way ticket out of Microsoft.”
A general manager told me people panicked when I came to the subsidiary offices, and I had become “one of the most hated persons in Africa.” Only later did I realize this was because I asked too many questions; I was stopping people from skimming money off their deals.

This is a classic culture of corruption. It doesn't get starker than this.

Examining an audit of several partners conducted by PricewaterhouseCoopers, I discovered that when agreeing to terms of sale for a product or contract, a Microsoft executive or salesperson would propose a side agreement with the partner and the decision maker at the entity making the purchase. This decision maker on the customer side would send an email to Microsoft requesting a discount, which would be granted, but the end customer would pay the full fee anyway. The amount of the discount would then be distributed among the parties in cahoots: the Microsoft employee(s) involved in the scheme, the partner, and the decision maker at the purchasing entity—often a government official.

Walmart got caught recently doing something very similar, https://www.sec.gov/news/press-release/2019-102

https://www.reuters.com/article/us-walmart-fcpa/walmart-to-p...

You can see the timeline of FCPA cases here,

https://www.sec.gov/enforce/sec-enforcement-actions-fcpa-cas...

madrox6• 4 years ago

I get that's the insinuation, but there's a leap the reader is expected to make between "this middleman made a lot of money" and "bribes were clearly happening" without further investigation. If a car salesman convinces me to pay more for a car than someone else pays that doesn't mean someone was bribed; the rest is a matter of degree.

I get that bribery happens, and I get that the SEC stepped on Microsoft employees for bribery in Hungary. I also get the impact that bribery and corruption has on lives. None of that is material to what's being said about this situation. In fact, it's relying on the reader's passion to make these leaps.

bearbearbear• 4 years ago

It's not uncommon for corporations to pay money in bribes because in many countries it's a cost of doing business; it would be otherwise impossible to get anything done.

If a company is required to pay, say, $3,000 to a corrupt official to pass a checkpoint and get access to an area where they have some business to tend to, then scale that economically to a multinational conglomerate like Microsoft who might do business in that same area 35 times in a week for various reasons and the amount of bribe money flowing out of their coffers increases to scale.

sloan• 4 years ago

Why am I not surprised. Microsoft operates in all the sketchy countries.

throwaways85989• 4 years ago

Ah, yeah, company ethic lectures,pamphlets and statements. I love those on webpages.. right beside the company locations world map.

Love it, when they then have branch offices, that "exclude" one another - as in you can not be active in both countries, without violating a law of one, and obviously bribing yourselves out of that to be active in both.

At least they prevent some moral philosopher from starving, who got bribed to write this.

NoblePublius• 4 years ago

Corruption is why we win https://youtu.be/1yhAOs94n8k

akagusu• 4 years ago

No company becomes a billionaire company without bribing someone out there.

hedora3• 4 years ago

Despite what the article says, the foreign corrupt practices act is intentionally full of loopholes.

Don't take my word for it. Here's the Justice Department's opinion:

https://www.justice.gov/criminal-fraud/foreign-corrupt-pract...

Tl;dr:

If a US employee wires the money, is aware of / ordered the bribe or the bribery takes place on US soil, it is definitely illegal.

Hire a lawyer or ask us before putting foreign employees in a position where they might engage in bribery of foreign officials that don't violate these rules.

Be sure to perform thorough accounting in any case.

Based on the allegations in the article, Microsoft seems to have been following the rules until the whistleblower started screwing up the "is aware of" part.

lizknope• 4 years ago

I've been working in the tech industry for 25 years. I've probably watched 10 different corporate ethics training videos that cover bribery and inappropriate gifts. At the end we have to answer a quiz to prove we weren't asleep.

In all my time I have never had any control over money and no way to bribe someone even if I wanted to.

About 5 years ago I check my email in the morning and there are emails from the corporate legal and PR teams about not answering any questions from reporters about a certain employee. They state this person is no longer an employee.

I immediately google his name and find that he has been arrested on foreign bribery charges.

Everyone in our team was laughing that he must have forgotten to take the mandatory corporate ethics and anti bribery training.

What is the point of making us watch all these videos when we have no budget authority anyway while the C-level execs bribe people?

ComradePhil• 4 years ago

Everytime something like this comes up, westerners pretend that they are shocked, which I find hard to believe.

Western aid agencies and humanitarian agencies work closely with corporations and third world governments to get their way. Oftentimes, these bribes are not as direct as alleged here. Instead, the corporations donate to humanitarian agencies, which then allocate it as budget in the target country in exchange for business deals. Most of the aid disappears in "admin expenses" i.e. it goes to fill the pockets of people making these deals with these corporations.

taxyz232• 4 years ago

Highly skeptical of this take. Lots of allegations claiming various payments are really bribes When all is said and done there will be few true bribes found and those will likely be by rogue relatively lower level or little supervised employees Suspect this is a disgruntled employee with a good lawyer who dreamed up a way to squeeze Microsoft. Who doesn't hate or want to hate Microsoft ? Big companies are well aware of the massive liability and associated legal costs under US federal law for bribery (domestic and foreign) and no way are they going to conspire systemically to destroy themselves. There have already been well documented and publicized federal bribery cases against companies such as Walmart. No legal department is going to tolerate bribery

Microsoft is tied to hundreds of millions of dollars in foreign bribes

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