February 26, 2015 / 8:11 PM / 3 years ago

Ex-managers say Microsoft retaliated after complaints of hostess bar expenses

SEATTLE, Feb 26 (Reuters) - Two former Microsoft Corp managers have sued the company, saying they were forced out after they raised concerns about an employee’s large claims for expenses in South Korea that may have included sex services.

The lawsuit, filed by George Engstrom and John Stockwell in state court in Seattle, says an unnamed Microsoft employee ran up entertainment expenses of more than $22,000 from taking potential business partners to South Korean “hostess bars”, which often provide sexual services to customers.

Microsoft dismissed the claims and said it would fight the matter in court.

Engstrom and Stockwell say they alerted Microsoft to the outsize expense claims and possible link to prostitution in 2011 and that the company began an investigation.

During that probe, Stockwell says Microsoft’s human resources department asked him to drop the issue and to raise the employee’s performance review. After Stockwell and the company could not agree, the lawsuit says, Microsoft unilaterally raised the unnamed employee’s performance rating and allowed him to transfer to another division.

The plaintiffs say they were soon moved off the project they had been working on - related to Microsoft’s Bing search engine - and that their subsequent projects were scaled down or shuttered.

Engstrom and Stockwell say they both received performance ratings of ‘5,’ the lowest on Microsoft’s scale, in 2013 and that the company fired them months later.

The two are suing for lost pay and benefits and damages for emotional distress. A trial is set for March 7, 2016.

“We’ve carefully reviewed this case and found nothing to substantiate the speculation in the complaint or the allegation of retaliation, and we’re confident a court will agree with us,” said Microsoft in an emailed statement. “We always encourage employees to raise concerns that they may have, and take such reports seriously.”

The case is 15-2-04785-0 in the Superior Court of the State of Washington for King County. (Reporting by Bill Rigby; Editing by Lisa Von Ahn)

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