On July 22, 2019, Microsoft settled FCPA charges with the US Department of Justice and the Securities and Exchange Commission. In the DOJ settlement, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft. (Microsoft Hungary), a wholly owned subsidiary of Microsoft Corporation, entered into a non-prosecution agreement with the DOJ, agreeing to pay $8.7 million to resolve an investigation into foreign bribery in Hungary. According to Microsoft Hungary’s admissions, between 2013 and 2015, employees of Microsoft Hungary represented to Microsoft that sales of Microsoft licenses to Hungarian government agencies, which Microsoft Hungary made through third-party resellers, required significant additional discounts. In fact, those additional discounts were not passed through to the government end-user, but were instead used for corrupt purposes—including improper payments to Hungarian government officials—and were falsely recorded in Microsoft Hungary’s books.
The DOJ did not provide Microsoft Hungary voluntary disclosure credit because it did not voluntarily self-disclose the conduct; however, the DOJ credited the company with substantial cooperation during the course of the investigation and with taking remedial measures to enhance compliance and mitigate the risk of corruption. In addition the $8.7 million penalty, Microsoft and Microsoft Hungary are also required to review their compliance programs and make certain listed improvements, and to report on the status of such improvements at least annually during the three-year term of the NPA. No external monitor was imposed.
The SEC entered into an administrative resolution with Microsoft concerning violations of the books and records and internal control provisions of the FCPA for conduct in Hungary, Saudi Arabia, Thailand, and Turkey. In addition to referencing the conduct described in the DOJ’s NPA, the SEC’s order also refers to the approval of an excessive discount by executives at Microsoft’s wholly-owned subsidiary in Turkey and the provision of improper travel, gifts, and other things of value to foreign government officials by Microsoft’s wholly-owned subsidiaries in Saudi Arabia and Thailand. Microsoft agreed to pay disgorgement and prejudgment interest of $16.6 million.
Cease and desist order