Microsoft accused of spending millions on bribes to seal business deals Yasser Elabd, who formerly served as a senior director at Microsoft, has accused the Windows giant of paying illegal bribes to close business deals in the Middle East and Africa. In a post published on whistleblowing platform Lioness this week, Elabd alleged how in 2016 he challenged a dubious $40,000 payment to make a sale in …
are all very well, but some people do not seem to believe that they should get in the way of doing business.
> "We are committed to doing business in a responsible way and always encourage anyone to report anything they see that may violate the law, our policies, or our ethical standards,"
I'm sure Mr Hebblethwaite of P&O would have said exactly the same thing a week ago. (https://www.bbc.co.uk/news/business-60872294 ). Of course Mr H does not seem to consider that the managers who let the situation get so bad that they felt the need to break the law should hold any responsibility for that. but maybe I do him a disservice and he's about to explain, while wearing sackcloth and ashes.
I remember a manager at one of my previous employers saying that if the rules did not allow him to do what he wanted, he "broke the rules". My response was that I prefer rules that work.
The US Foreign Corrupt Practices Act allows for an individual to sue a company like Microsoft on behalf of the government. If the guy's sure he's got the goods on Microsoft, that's always an option. Assuming he does indeed have the goods on MS, and what he alleges has actually been taking place, I do hope at some point Microsoft gets nailed to the wall for it.
I do hope at some point Microsoft gets nailed to the wall for it
1. Microsoft is "too big to fail".
2. (Very) Large American-owned corporation is "exempted" from US Foreign Corrupt Practices Act.
3. American justice is the best system money can buy.
Look it it this way: No one in the "C" level (or higher) ever got hauled to court for the death of 346 people.
(Yes, I fully understand I will get negged for this comment. I am just highlight the current state of "reality" -- That there is just one set of rules: Applies to everyone else but themselves.)
In the UK we prefer cronyism, it benefits the wealthy without dragging the plebs in to the milieu.
And yes, in many countries bribes are effectively legal.
Maybe not actually legal, but think of breaking the speed limit on a UK motorway by 1 mph.
Nobody's going to bother going after you even if you are technically breaking the law.
Microsoft probably (definitely?) aren't alone anyway.
"And yes, in many countries, bribes are effectively legal."
And yes, in the UK bribes are effectively legal, in certain circumstances, if "higher considerations are at stake".
This was tested (though never proven) during the Serious Fraud Office investigation into bribery allegations involving the Saudi royals and the arms group BAE. In 2006 the SFO was forced to drop investigations into BAE's biggest arms deals in Saudi Arabia. Tony Blair, the then prime minister, in effect granted immunity to the Saudi ruling family.
Blair effectively overruled, Peter Goldsmith, the then Attorney General, Blair told him "higher considerations were at stake". Blair personally vetoed a proposal that BAE could plead guilty to lesser corruption charges, saying this would "be unlikely to reduce the offence caused to the Saudi royal family". And from it, the SFO case was eventually dropped, in the interests of 'national security'.
That depends on your definitions.
I've done my fair share of tedious online training on the UK bribery act and the US Foreign Corrupt Practices Act and one key difference is the FCPA allows for something called Grease Payments - which are roughly defined as something that speeds up the process but doesn't change the outcome. This is not legal under the UK Bribery act.
Having worked for companies doing business in the Middle East, I always assume that every deal involves payments to individuals, it's just you normally have a middleman to make it a bit less obvious.
Update courtesy of some high profile busts of a political party in Australia receiving a series of very large cash donations from some friendly Chinese chaps
We Australians are lucky our pollies only got cash.
We, currently, do not know if any of our pollies are sleeping with Beijing's "sleeper" agents, like Fang Fang.
Some years back a bill was proposed to require members of the state (IIRC CA) legislature who received corporate contributions (over some amount) to wear a sponsorship badge on their "work clothes", much like NASCAR drivers.
While it would certainly add a bit of variety to the usual dull clothing, for some reason the bill did not make it to a vote.
Let's rather say that it is immaterial whether they are legal or not, because they are expected/required.
Both on the business side and on the average Joe side who needs to interact with public institutions, from getting a permit to getting a passport.
Far from condoning it, and there's a strong rationale for not having foreign corporations come in and make the problem worse. On the other hand, when in Rome...
As the article points out, Microsoft did this and admitted to criminal violations in 2019.
Hoping for new dirt on M$, I read through Elabd's post and clicked on every link. All of them were prior to 2019.
M$ may still have bad apples amongst its international network but Elabd doesn't give us any evidence of any of them.
The vagueness of the charges, the lack of recent evidence, and the fact that his complaint which he "submitted three times" is not linked to in the article makes me suspect this is a build-up to a wrongful termination lawsuit (for which I think he has a much better case).
Anyone remember Munich?
I'm not condoning bribery but, as others here have noted, it's commonplace in many countries.
Microsoft has to be feeling the pinch, with the open source equivalents being as good as they are now. And I don't think their Windows11 stategy is going to be a winning one in poorer economies either.
Welcome to standard business practice for virtually all of the non-Western world. It's got much slicker about adapting mechanisms to finesse Western laws when dealing with Western firms, that's all.
Example: I don't know the current mechanism, but if you ever drank an African-grown coffee up to about the mid-00s, that coffee's initial purchase started with a little man getting off a plane in Africa with 2 suitcases. One had a change of clothes and a toothbrush, the other was solid US$ bills. He had to peel off some for himself (usually immediately after checking into his hotel) to implicate himself or the deal was off (with a lot of acting confused, outraged, etc at the suggestion they'd take a bribe -- defence vs the expected law-enforcement raid). At the meeting, the suitcase crossed the table one way and disappeared, the contract crossed the other way and was taken back to head office which officially knew nothing.
With minerals, well, in the mid 20teens Glencore would pay v.hefty consulting fees to an intermediary, some of which the intermediary saw.
The English Raj in India formally added a percentage of all bills, to pay for the mandatory systemic baksheesh.
In Asia, it's so endemic, it's done day-to-day by ordinary citizens for almost every government/bureaucracy step: it's called Tea Money. Money in an unsealed envelope; when the conversation pointedly gets elliptical, you slide the envelope across; it's whipped out of sight and checked; if sufficient, the conversation suddenly returns on track and progress happens; if it's insufficient, it's just slid back across the desk to you.
This chap is clearly either deranged, in another world of next-level naivety, or has another angle, like a previous commenter suggested.
"This chap is clearly either deranged, in another world of next-level naivety, "
Neither, while you missed the points totally and ranted something thoroughly irrelevant. True, but not relevant.
a) MS is a US company and b) bribery is illegal in US for US companies, globally.
What is 'business practise' somewhere else, is totally irrelevant to either a) or b).
In practise legislation about bribery is a joke when politicians themselves get millions and billions in bribes every year, just magically legal by slapping label 'campaign money' on it. Grade A hypocrisy politicans are know for, especially Republicans.
Perhaps Microsoft should try that too.
No, YOU are missing the point.
Companies in those markets either play ball or don't get very far.
Western companies must and do adopt tactics to obfuscate vs their domestic law. Or else stay domestic. Because domestic people passing domestic laws does not magically change other cultures. Obama acknowledged that when it affected him personally: have a look at how much of the money he paid Iran for his prized deal, was paid in cash over the table that the deal agreement was sitting on. Literally cash, literally handed over in person, and physically checked before signing. The rest of the money was paid normally and may have actually made it into the government treasury.
Welcome to the real world. You might like to re-read my post and try taking it on board.
Cultural differences are such that bribery is the default practise in far too many countries. It is arguably default in the west too, no matter how much is done to hide it.
Wealth breeds wealth and those without, rot. We’re not so far removed from the default practise in so called less civilised lands.
See the recent interviews of Ian Hislop at the commons select committee for examples.
Yes minister touched on the subject too.
They usually calling "Marketing Agreements" when they funnel funny money to someone or some company so that they get the deal Microsoft wants.
They have funneled money through a Canadian bank at one point to fund a company sueing Linux customers. They'd done things like licensed their software API to a handful of companies to kill off a competitor and when the competitor is gone, they set the new licensing fees through the roof for all of the licensees but they made sure to hire one of them for an expensive port of a useless software product to keep legal hounds at bay.
And remember when Microsoft had wanted a particular product 'reviewed' and they hounded an editor of a particular rag until he relented. Then the writer of the article was stunned to have received an email from Microsoft which included email addresses from 11 other Microsoft employees who were all working in concert to manipulate the information the 'review' writer was getting to steer him towards the 'review' having specific information and structure.
Then there were the secret NDAs regarding bogus patents for stuff like the FAT filesystem and the strong arming of Windows licensees to get them to pay a license for MS-FAT for every Android system sold. And you know the $$ was flowing back in the 90s when everything tech was disseminated by rags like PCWeek, InfoWeek, ComputerWorld, etc etc.
If this goes to court and they dig deep enough they will find lots of gold. Remember how often Microsoft used to reorganize and move departments and money around? This stuff is not a recent thing at Microsoft. Not by a long shot.
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when I worked for a US Computer Company, we had to take regular FCPA training. If I recall correctly, it was every two years.
If we accepted even a meal from the customer and didn't declare it then we faced being extradited to the USA and spending a decade or three in jail.
Again, back in the day, we knew that we lost deals to MS who swooped in at the last minute and took the biz away from us. No proof but it happened almost every time.
Those of us old enough to have been in IT 30+ years ago remember Microsoft products being forced on us by senior management. That management considered it a badge of honour to be able to say "of course I don't understand this rubbish".They took the "persuasion" from MS and forced in everything from DOS, Win311 and early versions of Office to Windoze NT (aaargh!!).
Perhaps some of us remember telling some senior secretary why she could no longer use WordPerfect and was now lumbered with MS Word!
Microsoft did not get into its position of dominance here because of superior products or the super-enthusiastic support of IT departments! What other way did they get there?
It doesn't excuse the behaviour at all, but this sort of business practice is the standard across large parts of the globe.
It just depends how honest you are as to whether you do business in these countries. I was told at one company that they kept a list of countries where they simply did not bother to submit quotes or tenders. And another list of countries where they didn't do business at all.
The first list were countries where if you submitted a tender for work no matter how good or cheap your tender you would be expected to pay significant "fees" in order for the deal to go through. But in these countries if somebody came to you wanting to buy then things would usually go smoothly. These fees were often given official sounding titles but it was obvious they were simply bungs.
The second list was of countries where it was common for customers to come to you to buy and would still expect you to pay "fees" to do business. In these countries they often didn't bother to hide the fact that these fees were nothing more or less than bribes because that was the standard way of doing business in that locale.
[Microsoft president] Brad Smith expressing disappointment with those involved and declaring the company's support for ethical business practices.Hey, who knows, if they keep practising, maybe someday they'll even have some.
"[W]e hope that all of the steps we’ve since taken, including today’s settlement, send a strong message," Smith said.Nice how the case against them, and their losing it, is suddenly 'a step they've taken,' isn't it?
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