NEW YORK: Microsoft Corp agreed on Monday to pay about $25.3 million, including a criminal fine, to settle US charges that it made improper payments that were used to bribe government officials in Hungary and other countries.

The US Department of Justice said Microsoft Hungary will pay the $8.75m criminal fine, as part of a three-year non-prosecution agreement in which it “admits, accepts and acknowledges” responsibility for employees’ misconduct.

Microsoft also agreed to pay nearly $16.6m to settle related civil charges by the US Securities and Exchange Commission (SEC) over its activities in Hungary, Saudi Arabia, Thailand and Turkey, without admitting wrongdoing.

Both settlements resolved charges that Microsoft violated the federal Foreign Corrupt Practices Act, after the Redmond, Washington-based company failed to account for the improper payments in its records.

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

“There is no room for compromise when it comes to ethical business practices,” Smith said in the email’s subject line.

Prosecutors said the Hungarian scheme generated at least $14.6m of improper profit for Microsoft between 2013 and 2015, in connection with the sale of software licenses to Hungarian government agencies.

Executives and employees at Micro­­soft Hungary, which is based in Budapest, were accused of falsely telling Microsoft that steep discounts were needed to complete the transactions.

Prosecutors said the savings should have gone to customers, but were instead used by intermediary resellers in part to pay bribes to government officials, with Microsoft recording the discounts as legitimate business expenses.

Published in Dawn, July 23rd, 2019