UPDATE 2-Microsoft backs review of foreign bribery allegations

Tue Mar 19, 2013 4:04pm EDT

* Company says gov't review of allegations "appropriate"

* Neither Justice Dept nor SEC confirms inquiry under way

* Microsoft shares unmoved

SEATTLE, March 19 (Reuters) - Microsoft Corp said on Tuesday that allegations of potential bribery by employees in China, Romania and Italy should be reviewed by U.S. agencies and its own compliance unit, but declined to address the specifics of any cases.

The software giant's comments came after the Wall Street Journal reported that the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) had launched investigations over tips from a former Microsoft employee that the company handed kickbacks to foreign government officials in return for software contracts.

"The matters raised in the Wall Street Journal are important, and it is appropriate that both Microsoft and the government review them," wrote John Frank, the company's deputy general counsel, in a blog post on the company's website.

"We take all allegations brought to our attention seriously and we cooperate fully in any government inquiries," he added, without confirming that the software company was aware of any investigation.

The SEC declined immediate comment. A Justice Department spokesman said he could neither confirm nor deny the existence of an investigation.

Investigations of potential violations of the U.S. Foreign Corrupt Practices Act (FCPA) are fairly common among U.S. companies. Microsoft rival International Business Machines Corp agreed in 2011 to pay $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China, but is still waiting for a judge to sign off on the deal.

The DOJ and SEC brought 23 FCPA cases last year, down from 48 in 2011 and 74 in 2010, according to statistics compiled by the law firm Gibson, Dunn & Crutcher.

The China allegations spring from information passed by a former Microsoft employee to U.S. investigators last year, according to the Journal report, which cited an unnamed source it said was familiar with the matter. Microsoft hired outside lawyers to conduct a 10-month internal investigation which found no wrongdoing, the report said, citing unnamed people briefed on the investigation.

The Journal said the investigations are in the early stages and the government has not accused any party of wrongdoing.

Microsoft declined to talk about specifics of any inquiries, but in his blog post Frank offered what he called "perspective".

"In a company of our size, allegations of this nature will be made from time to time. It is also possible there will sometimes be individual employees or business partners who violate our policies and break the law. In a community of 98,000 people and 640,000 partners, it isn't possible to say there will never be wrongdoing," wrote Frank.

"Our responsibility is to take steps to train our employees, and to build systems to prevent and detect violations, and when we receive allegations, to investigate them fully and take appropriate action. We take that responsibility seriously."

Microsoft shares were down 1 cent at $28.12 on Nasdaq.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video