An ex-employee alleges Microsoft spends about $200M+/year on bribes and kickbacks via its foreign contracts business; Microsoft says the claims were addressed

In 2016, Yasser Elabd noticed a $40,000 payment to a client in Africa that didn't smell right.

The Verge 2022-03-27 Russell Brandom

Context & Ripple Effects

The allegations revive a compliance issue that previously drew U.S. enforcement attention: Microsoft was reported to be under DOJ and SEC scrutiny over Hungarian software sales before reaching a $26 million settlement with the SEC and DOJ in 2019. Microsoft now says the former employee's claims were addressed.

First-order effects

Microsoft must again defend its controls over foreign-contract sales, while Yasser Elabd's account puts the handling of the flagged Africa payment at the center of the allegations.
The prior Hungary settlement gives the claims an existing enforcement backdrop, even though the supplied coverage does not establish a new DOJ or SEC action.

Second-order effects

Microsoft's foreign-contract partners and internal compliance teams face renewed pressure to document payments and sales incentives, because the allegations concern the channels through which overseas deals are conducted.
The claims make Microsoft's assertion that the matter was addressed more consequential: its response will be judged against the earlier settlement involving alleged corruption in software sales.

Third-order effects

If repeated allegations continue to surface after anti-corruption settlements, large enterprise software vendors may face a higher bar to show that remediation reaches overseas reseller and contract-sales operations.
The pattern points to compliance enforcement becoming an ongoing governance constraint on global software sales, rather than a one-time cost of resolving a case.

The trend: Past anti-corruption settlements are increasingly becoming the benchmark against which renewed allegations about multinational software companies' overseas sales practices are assessed.

Discussion

@techwontsaveus @techwontsaveus on x
“Elabd estimates that more than $200 million each year is spent on bribes and kickbacks linked to [Microsoft], often in countries like Ghana, Nigeria, Zimbabwe, Qatar and Saudi Arabia.” https://www.theverge.com/...
@hkanji @hkanji on x
This kind of corporate bribery is a widespread problem internationally https://www.theverge.com/...
@james_s_white James S White on x
This can't be true. Microsoft requires employees to watch a video once a year that explains to explicitly not accept or pay out bribes. https://www.theverge.com/...
@theryanford Ryan Ford on x
This is wild. Employee: Microsoft is bribing tons of people. Microsoft: Yep, but we “fixed the glitch.” We won't tell you how. https://twitter.com/...
@tomwarren Tom Warren on x
a whistleblower has alleged that Microsoft is tied to hundreds of millions of dollars in foreign bribes. The former Microsoft employee says “it's going on at all levels,” and Microsoft says it has previously investigated the claims and addressed them https://www.theverge.com/... …
@russellbrandom Russell Brandom on x
A really alarming look at corporate bribery from a former Microsoft employee https://www.theverge.com/...

Chronicles