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Microsoft Businesses Government The Almighty Buck United States

Microsoft, Partners Probed Over Bribery Claims 137

Posted by Soulskill
from the all-about-the-benjamins dept.
c0lo writes "U.S. federal authorities are examining Microsoft's involvement with companies and individuals that allegedly paid bribes to overseas government officials in exchange for business. The United States Department of Justice and the Securities and Exchange Commission have both opened preliminary investigations into the bribery allegations involving Microsoft in China, Italy and Romania. The China allegations were first shared with United States officials last year by an unnamed whistle-blower who had worked with Microsoft in the country, according to the person briefed on the inquiry. The whistle-blower said that a Microsoft official in China directed the whistle-blower to pay bribes to government officials to win business deals. U.S. government investigators are also reviewing whether Microsoft had a role in allegations that resellers offered bribes to secure software deals with Romania's Ministry of Communications. In Italy, Microsoft's dealings with consultants that specialize in customer-loyalty programs are under scrutiny, with allegations that Microsoft's Italian unit used such consultants as vehicles for lavishing gifts and trips on Italian procurement officials in exchange for government business. In a blog post Tuesday afternoon, John Frank, a vice president and deputy general counsel at Microsoft, said the company could not comment about continuing investigations. Mr. Frank said it was not uncommon for such government reviews to find that the claims were without merit. Somehow, given the way OOXML became a standard, it wouldn't surprise me if it were an actual fire that caused this smoke."
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Microsoft, Partners Probed Over Bribery Claims

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  • by Anonymous Coward on Wednesday March 20, 2013 @01:47PM (#43226237)

    The China allegations were first shared with United States officials last year by an unnamed whistle-blower who had worked with Microsoft in the country

    I don't know who this "whistle blower" was (likely a government official who they didn't bribe well enough), but EVERY company that does business in China bribes. It's more than a way of life there, it's absolutely ubiquitous. The only reason you don't have to pay bribes to breathe there is because no government official has found a way to extract them yet (and they would if at all possible). To do business there, you have to start with the knowledge that the whole goddamn country is built on two things: bribes and lies. And if you're lucky, a generous enough bribe MIGHT get you SOME of the truth every now and then. It's worse than India and Russia combined.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      EVERY large company that does business ANYWHERE bribes.

      ftfy

      • by boristdog (133725)

        Exactly. Even small businesses in the USA. Been there, done that.

      • by ShanghaiBill (739463) * on Wednesday March 20, 2013 @02:33PM (#43226721)

        EVERY large company that does business ANYWHERE bribes.

        Baloney. I have run my own business in the USA for more than twenty years. I have never paid a bribe. Not once. I have never been asked for a bribe either. If I ever was, the first thing I would do is report it to the police.

        I have also lived and worked in China, and have some employees there today. Although I have paid bribes ("facilitation fees") there, they are becoming much less common. China is trying to clean up their act, and a more "rule-based", transparent China is in everyone's best interest.

        The most common bribes paid in China today are not business bribes, but migrant workers trying to bribe their way around the Hukou System [wikipedia.org] in order to send their children to public schools. The Hukou system is a form of feudalism that bonds workers to the land. Under Mao, it was used to ban all internal movement of people. Today, people are allowed to migrate, but they surrender most of their legal rights when they do so. Abolition of the Hukou would probably do more to improve human rights than any other single change in the world.

        • by tompaulco (629533)
          Baloney. I have run my own business in the USA for more than twenty years. I have never paid a bribe. Not once. I have never been asked for a bribe either.
          Never taken a client to lunch? Never gave or loaned a product to a client? Never paid for hotel rooms for clients for a user convention? All of these are bribes as well, just not direct monetary bribes. And because everybody does it, they are not looked down upon. The reason this story is a story is because China's "everybody does it" is different from
          • by Pubstar (2525396)
            Thats like saying every woman I took to dinner and slept with later is a prostitute. Sure, I didn't pay her DIRECTLY, but there was money involved going directly towards something for her.
            • by tompaulco (629533)

              Thats like saying every woman I took to dinner and slept with later is a prostitute. Sure, I didn't pay her DIRECTLY, but there was money involved going directly towards something for her.

              Yup, it's all a line drawing game.
              But no, taking a woman to dinner is not prostitution, it's gambling.

      • My company has a strict policy against bribes.

    • Yup, it's why the whole "expediter" industry exists - to isolate American business from the "bad things" while still being able to operate in countries where you can't even get the most basic permits without money being passed under the table.
    • by mc6809e (214243) on Wednesday March 20, 2013 @02:06PM (#43226445)

      I don't know who this "whistle blower" was (likely a government official who they didn't bribe well enough), but EVERY company that does business in China bribes. It's more than a way of life there, it's absolutely ubiquitous.

      It's not just China, either.

      And calling this "bribery" isn't always correct. "Extortion" is probably just as a appropriate at times.

      Western multinationals can't do business in most parts of the world (and even US companies in parts of Europe) without some local official demanding money up front to make sure important documents like applications for permits don't "go missing", or that so-and-so's brother on some commission can be "advised" to make the right decision -- the implication being that you'll be held up if you don't pay up.

      • by Sarten-X (1102295) on Wednesday March 20, 2013 @02:35PM (#43226733) Homepage

        Yep.

        I volunteered in Ghana for several months, and saw corruption on a daily basis:

        I can build that new room cheap and in a month... but it'd really be better if you pay twice as much to buy this good concrete (from my brother) rather than that crappy concrete that falls apart (when mixed ignoring the directions).

        Your visa's still a week away from expiration, but even though it's not written anywhere, there's a $25 fine for not renewing it two weeks in advance. Yes, I collect the fee personally, as a agent of the government. Cash only.

        Sure, you can take this taxi to that village, but there's a $5 fee for each bag, and each pocket.

        Yeah, that other guy bought a machete for $40, but this identical one is my best! It's $200.

        From the stories I've heard from others, the way for Westerners to do business in Africa is to first set a budget for a project, then find a local as a project manager, with the agreement that anything left in the budget goes into his pocket.

        • With regard the second one (visa and fee), I suggest asking for a receipt.
          With the third one (taxi), just walk away, find another taxi.
          With the fourth one (machete), just walk away; the person will probably call you back. You might not get the $40 price (white man tax) but you should be able to get it down to $60 or so.

          OK, I can't speak for Ghana, but I think that just walking away is a good option in almost any case like the ones you mentioned (where you have other options anyway, which is obviously not th

          • by Sarten-X (1102295)

            For the sake of completing the story:

            The first was solved by a long and insistent argument that ended with the builder giving up and mixing the concrete correctly.

            The second one I ended up paying, and I did get a receipt, which was promptly handed over to the police when I reported the corruption. That report was probably promptly discarded. As you said, there's not much hope for government corruption.

            The third was when I discovered my wife's negotiating skills. I'm pretty sure she's memorized the standard

      • by number17 (952777)
        As one Former US Senator put it, lobbying is "not legalized bribery, it's legalized extortion." And it's not extortion by companies, but extortion by politicians.

        http://www.techdirt.com/articles/20120406/18051618415/is-lobbying-closer-to-bribery-extortion.shtml [techdirt.com]
      • by NoKaOi (1415755) on Wednesday March 20, 2013 @03:28PM (#43227277)

        And calling this "bribery" isn't always correct. "Extortion" is probably just as a appropriate at times.

        Or, in the US, where it's called "campaign contributions" and "lobbying."

        • That was in the old days. Now, this extortion is simply called free speech and since companies are officially people, we can't have anybody muzzling them.

    • Re: (Score:1, Troll)

      by jhoegl (638955)
      Cool cool...
      So this is why I pay extortion amounts of money for an OS that sucks balls every other release?
      Or how about my business paying for CALs on stupid shit that should come with the OS/Software I am working with?

      I am supposed to be paying for a better product and product updates, not to line the pockets of some jackass intent on jackassery.
      • Re: (Score:3, Interesting)

        by Runaway1956 (1322357)

        "So this is why I pay extortion amounts of money for an OS that sucks balls every other release?"

        No, not at all. You pay those extortionate amounts of money because you are unable or unwilling to "Just say "NO!"" I paid for three legitimate installations of that company's operating systems. Then, I found alternatives. Yeah, it takes a little bit of work, but it's not that hard.

        • "So this is why I pay extortion amounts of money for an OS that sucks balls every other release?"

          No, not at all. You pay those extortionate amounts of money because you are unable or unwilling to "Just say "NO!"" I paid for three legitimate installations of that company's operating systems. Then, I found alternatives. Yeah, it takes a little bit of work, but it's not that hard.

          It is that hard... or more people would be doing it...

          Apple keeps telling us that it's all about the apps. Well, Windows still has all of the apps, games, productivity software, financial software, etc. OSX does have some of these apps, but you are severely limited in choice. As far as games, Windows is "still the only game in town"...

          • by tqk (413719)

            It is that hard... or more people would be doing it...

            No, it's not. People are lazy, or they prefer to conform, or they want to be safe. FLOSS is very easy to use, once you grow a backbone.

          • by sjames (1099)

            It is that hard... or more people would be doing it...

            Except that each of them applied the quoted fallacy.

    • The China allegations were first shared with United States officials last year by an unnamed whistle-blower who had worked with Microsoft in the country

      I don't know who this "whistle blower" was ...

      Someone whose whistle was not blown well enough, it seems.

    • by joeflies (529536)

      The whistleblower was either working for Microsoft or on Microsoft's behalf.

      "a Microsoft official in China directed the whistle-blower to pay bribes to government officials to win business deals"

    • then we can only happily conclude Microsoft has fallen out of grace.
      This means the beginning of the end.
      Bye bye Billy.

    • by JDG1980 (2438906)

      I don't know who this "whistle blower" was (likely a government official who they didn't bribe well enough), but EVERY company that does business in China bribes. It's more than a way of life there, it's absolutely ubiquitous. The only reason you don't have to pay bribes to breathe there is because no government official has found a way to extract them yet (and they would if at all possible). To do business there, you have to start with the knowledge that the whole goddamn country is built on two things: b

      • the FCPA is far too broad and really needs to be substantially revisited.

        I strongly disagree. As an American, I am proud that my country has provided moral leadership in this area. The effect of the FCPA is not always negative on American businesses. Citizens of other countries know about the FCPA, and there is a perception that if a contract goes to an American company, that the bidding process was more likely to be clean. Also, American companies don't just passively accept losing business to less ethically constrained competitors. They have an incentive to work for clea

      • by hedwards (940851)

        And with good reason. The only way these practices stop is if companies stop doing business like that. As American companies, they generally have options of where to take their business that local companies don't.

        The only problem here is that there aren't enough countries signing on to these sorts of initiatives. Corruption has no place in civilized society and ultimately, foreign companies usually have a lot more money and influence over them than domestic companies would.

      • by sjames (1099)

        No, it is only illegal to continue after being victimized by an attempted shakedown. Walk away and leave them to decay in their own pile of excrement and you're fine as far as U.S. law is concerned.

    • by poetmatt (793785)

      which sounds nice until you realize that US laws expressly prohibit it, whether it's the way things work over there or not.

      • Shall we put you in charge of arresting the CEO of every single company that has every done business in China?

        • by poetmatt (793785)

          what do I personally have to do with the situation? What type of strawman comment is that? Last I checked, I have zero association. It's not my issue, but I also don't write the laws or enforce them.

    • by juancn (596002) on Wednesday March 20, 2013 @02:45PM (#43226833) Homepage
      It is pervasive in many places. Since the US frowns upon US companies bribing foreign officials, there are many consulting firms local to the country in question that take care of the bribes. These are never mentioned explicitly, so the US company doesn't actually pay the bribes, it just pays the consulting firm. And the consulting firm takes care of the bribes. That way you have deniability.

      Since the consulting firm is out of reach from the SEC et.al. discovery is a bitch and the cases cannot normally be pursued (unless you get one of the officials to testify, which is at least difficult).

    • No they don't. I know tons of foreign companies here in China and nobody bribes anybody. This is a fallacy held by people who have just read about China from horridly biased Western news reports. Hey, don't believe me, read this from an attorney specializing in China law for foreign companies:

      "One of the things I have always found troubling about Westerners doing business in emerging market countries is that they sometimes take an almost perverse pride in discussing payoffs to government officials. It i

  • by girlinatrainingbra (2738457) on Wednesday March 20, 2013 @01:54PM (#43226329)
    Considering how frequently the MS sales people seem to present a new option with lower licensing prices whenever a city or governmental agency is about to jump ship and get on board with Linux, isn't that sudden presentation of huge discounts almost like a bribe? Yes, i know that a bribe goes to a separate person in order for a transaction to go through, but when you've got to discount your prices that much for people to buy your stuff, that doesn't seem like a good sign!
    .
    And before some idiot goes the other way and sez "gnu/linux must suck real bad since the only way they get people to take it is to give it away for free!", realize that the concept of Free software (with liberty) being free (of price and cost) is secondary to the freedom it gives to the end-user and the things that come back to the developer(s) with GNU-GPL-licensed software. The freedom is an inherent essence to free software. It's not priced at $zero because people don't want it. It's priced at $zero because the community of developers believes in giving away and sharing the fruits of their labor to the community of the world
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Discounts != Bribes, even if it's Microsoft offering them. It's called being competitive.

    • Re: (Score:1, Troll)

      by BitZtream (692029)

      No, fanboy. Its given away for no dollar amounts because the entire community expects someone else to do their work for them. Linux is in no way free, contrary to how you like to warp the usage of the word. It comes with some very well defined restrictions, and those restrictions tend to attempt to infect everything around them, which is a fairly high cost to everyone who doesn't thinks they can live in a fantasy hippie commune.

      Its rather hipocritcal and ignorant of you to pretend pushing your political

      • re: your statement "The reality of it is you don't give a flying fuck about 'open' so much as 'I don't have to pay for it'."
        .
        Hey, big boy, don't bother trying to put words in my mouth. The reality of it is that you have no fucking idea what's in my mind. What is in my mind is the freedom of the software, not that it is free of cost. The fact that it is free of cost, and unencumbered by the idiocracy of the BSA (boy scouts or software, take your pick) trying to beat down your door to check to see if you
        • by s.petry (762400)

          Actually Microsoft thought the internet would fail. If you remember, Ballmer made a fool of himself at Windows 95 release because it only included NetBUI protocols. I'm too lazy to go dig up quotes, but they are there. Something along the lines of no business would ever use something that everyone else would be able to access. It was not until Windows 95B that MS shipped their own (albeit pathetic for many reasons) TCP/IP drivers with Windows, and it was not installed by default. If memory serves corre

        • by sjames (1099)

          I once tried to set up a perfectly legit MS solution for a client. Confusing would be an understatement when describing the license requirements. I was genuinely unsure how many of what type of license was required for the setup to be legit. So I called MS and got an answer, but they sounded a bit unsure. So I called again and gave the same description and got an entirely different answer. A third call got another distinct answer. Note that MS will NOT certify the answer you get and will not provide any so

      • by s.petry (762400)

        Wait. Did a troll just call someone a fanboi? In addition to the inaccurate description of the GPL, you also have a false statement. Its given away for no dollar amounts because the entire community expects someone else to do their work for them. Wait, what? So Linus expects all his Kernel development to be done by someone else? That is absolutely wrong. It's not even an exaggeration, it's a flat out lie.

        The rest of your rant just backs your trolling MS Fanboi position. Keep it to yourself.

    • by gurps_npc (621217)
      You know why you are wrong you still persist in your belief.

      That is because you don't understand what is going on.

      There is nothing wrong with offering discounts. It is common behavior. Do you think a store is doing something wrong because they have a sale? If so you are a fool. Discounts - real and fake (i.e. raise the price by 11% then offer 10% 'discount') are there for a reason - people like to to think they are getting a deal and sometimes it is reasonable to give them one. Particularly if for e

    • by DaveGod (703167)

      No that is not almost (or at all, in any way, shape or form) like a bribe. It is completely and fundamentally different from being a bribe, for the reason you state.

      • You are indeed correct, and I was pretty sure I thought that way too (which is why I included that line of reasoning). It just seems underhanded how they try to undercut or lowball the price when things aren't going their way. That sort of low-ball bidding is a different kind of corruption than bribery. I was trying to see if there was a way to see it as a form of bribery style of corruption, and I can see now that there's probably not a valid way to equate the two. Still seems bad though, IMHO. Thanks
  • While this sort of qualifies as 'for nerds', I fail to see how something that anyone with an ounce of common sense and passing interest in current technology events would consider this news.

    • Once in awhile it's nice to get an official record of Microsoft breaking the law and pulling stupid stunts.

      That way the MS fanboys and shills can't come along in a later conversation where the subject may come up, and then screech "prove it!" whenever some poor soul mentions that Microsoft is one highly corrupt pack of mofos.

    • It's not news but it explains why a discrete amount of people subjected themselves to windows stuff instead of doing the rational thing: go mac before 2005 and go linux afterwards.

  • by Anonymous Coward on Wednesday March 20, 2013 @02:06PM (#43226447)

    FYI: Microsoft Romania has an official budget line for "greasing decision factors" and it's so widely known that they are "very generous" that everyone expects them to bribe.

    Posting as AC, from Romania :-)

    • by Psyborgue (699890)
      Mod parent as informative. I lived in Romania for five years. If you wanted something done, you needed to pay a bribe, even for things as mundane as getting your trash picked up properly. Even for things like medical treatment. That's how it was in the late 90s, and based on how saturated the society was in corruption, i seriously doubt anything has changed. It's just the culture. You could blame the culture on a reaction to the bureaucratic bullshit created by communism, but there was still a lot of co
  • Simple (Score:5, Insightful)

    by characterZer0 (138196) on Wednesday March 20, 2013 @02:06PM (#43226449)

    The issue here is that the US government is not getting (enough) bribes. This probe will make sure that gets rectified.

    • by deaton (616663)
      Exactly. That would be the only reason U.S. federal authorities even care about this, it's not like they have any jurisdiction in those countries.
  • Shut the front door! I'd never believe it.

    I thought everyone pretty much knew that bribery is just a cost of doing business in the People's Republic? (Well, of course, in the States too)
    • by YA_Python_dev (885173) on Wednesday March 20, 2013 @02:21PM (#43226607) Journal

      In Italy, like the rest of the EU, public money must usually be spent through transparent public contracts awarded to the lowest bidder that satisfies all requirements.

      To make sure that Linux or LibreOffice don't cause problems the trick is very simple: they put e.g. "Windows 7" or "Microsoft Office 2010" in the requirements and pretend to have open competitive bids by comparing offers from different resellers for Microsoft software.

      Another common trick is to let the situation degenerate until it becomes an emergency. At that point the law allows contracts to be awarded directly to a company arbitrarly chosen by a politician. This explains "emergencies" that last decades like the garbages crisis in Naples [wikipedia.org].

      • by anarxia (651289)
        That's baby corruption. The real pros make their competitors do the work through cut-throat sub-contracting and they get a commission. Either that or It's possible to be the cheapest yet you complete the project by sub-contracting all of it to the same people you were competing against in the first place.
  • by Anonymous Coward

    Microsoft throws bribes all around to win software contracts?

    In other news, the new Pope is Catholic.

  • by walterbyrd (182728) on Wednesday March 20, 2013 @02:19PM (#43226591)

    August 31, 2007

    Sweden's OOXML vote declared invalid

    The Swedish Standards Institute has declared its recent vote in favor of Microsoft's Office Open XML format invalid. It means that Sweden will probably abstain from an important upcoming international vote on whether to make the format a standard.

    The reason given by SIS was not the controversial circumstances surrounding the vote, in which
    Microsoft was found to have offered companies "incentives" if they voted in favor of OOXML. Instead, SIS cited a technicality, saying proper procedures had not been followed.

    http://www.infoworld.com/t/platforms/swedens-ooxml-vote-declared-invalid-013

  • Here's how it ACTUALLY went down:

    Ballmer walks into room, wielding chair.

    "You know, there's a lot of not-nice things that can happen when you standardize around a non-Microsoft office format..."
  • I would be stunned if this did not happen. What about the current Microsoft management and behavior would indicate that they would not pay bribes for business? In fact, is that not pretty much their entire business model at this point?
  • If you get big enough, governments all over the world will expect kickbacks as the cost of doing business in their country. This happens in every country including the United States. The difference between the US and China is that our government spends a lot of time and effort dressing up bribes in the form of legislation and enforcement, while China doesn't see the point on providing anything but the most shallow cover for such activities.

    If you are not prepared to play ball with lining the pockets of th

  • When those countries said "You couldn't pay me to use that Microsoft crap."
  • We know how to get things done in the US. It takes a lot of money. Money pays lobbyists and lobbyists channel money to political entities. Money comes in more forms than I can count. A few come in the form of "revolving door" jobs where they get paid a lot for doing nothing.

    We don't allow direct bribes in the US. The bribes bust me masked, cloaked, laundered and/or transformed before they make their way to government.

  • You couldn't be more dictactorship friendly than when giving the possibility of https interception, as the same time betraying your own customers.
    http://en.wikipedia.org/wiki/Microsoft_Tunisia_Scandal#Citizen_Surveillance_and_Hacking [wikipedia.org]
  • Paying bribes to foreign despots is a time-honored tradition, one that is carried out by the Department of State in the form of foreign aid on a quarterly basis. I'm surprised that this is even an issue.

  • Let me help you guys.

    http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act [wikipedia.org]

    The SEC and DOJ have stated that they are going to be more actively pursuing this. That public statement, combined with whistle blower rewards makes it a ripe environment for these kind of investigations. Some prosecutions will come out of them. Most of them will end with settlements. Practically every Fortune 50 corporation will face some form of FCPA action over the next five years.

    Just to give the Apple haters something to

  • Its MS. What do you expect. This is the least of their criminal behaviors.

If it's worth hacking on well, it's worth hacking on for money.

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