Microsoft to pay criminal fine to settle U.S. anti-bribery charges

FILE PHOTO: The Microsoft sign is shown on top of the Microsoft Theatre in Los Angeles, California, U.S. October 19,2018. REUTERS/Mike Blake/File Photo

(Reuters) – Microsoft Corp agreed to pay about $25.3 million, including an $8.75 million criminal fine, to settle U.S. charges it violated a federal anti-bribery law by making improper payments to government officials in Hungary and other countries.

The U.S. Department of Justice said on Monday that Microsoft Hungary, which will pay the fine, also entered a non-prosecution agreement to resolve charges under the Foreign Corrupt Practices Act. Microsoft is paying $16.56 million to settle related civil charges by the U.S. Securities and Exchange Commission.

Prosecutors alleged that between 2013 and 2015, Microsoft Hungary executives and employees generated at least $14.6 million of improper profit related to the sale of software licenses to Hungarian government agencies.

The executives and employees were accused of falsely representing to Microsoft that steep discounts were necessary to complete transactions with resellers who bid for the chance to sell Microsoft licenses, and that the discounts were falsely recorded in its records as legitimate business expenses.

Prosecutors said the savings were not passed on to the government agencies, but were instead used by the resellers in part to pay bribes to Hungarian government officials.

The SEC said its settlement with Microsoft also resolves charges over the company’s business dealings in Saudi Arabia, Thailand and Turkey. Microsoft did not admit wrongdoing in that settlement.

In an email to employees, Microsoft President Brad Smith called the “misconduct” in Hungary “completely unacceptable,” and said the “small number” of employees who were involved are no longer with the company.

Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama and Dan Grebler