Feds expand inquiry into Microsoft bribery, kickback allegations

Tipsters blew whistle, claimed Microsoft and reseller closed deals in Pakistan and Russia with junket, payoffs, says Wall Street Journal

A U.S. government investigation into allegations that Microsoft or its business partners have bribed officials or handed out kickbacks to close deals has expanded to include Russia and Pakistan, according to the Wall Street Journal.

Although Microsoft did not confirm the newspaper's account, a company deputy counsel again promised that it would cooperate with any investigation.

"As previously stated, we take every allegation seriously, and we cooperate fully in any government inquiries," said John Frank of Microsoft, in a statement published on the firm's blog yesterday. "Like other large companies with operations around the world, we sometimes receive allegations about potential misconduct by employees or business partners, and we investigate them fully, regardless of the source."

In March, Frank said much the same, albeit at greater length, when the Wall Street Journal reported that Microsoft partners had been accused of bribing officials in China, Italy and Romania.

On Wednesday, the Wall Street Journal (paid subscription required) said U.S. regulators at the Justice Department and the Securities and Exchange Commission (SEC) were also investigating tips involving Microsoft itself or one of its resellers.

Microsoft authorized a consulting firm to pay for a Pakistani government official's five-day junket to Egypt to win a three-year Office contract, the newspaper said, citing incriminating documents it had acquired.

In Russia, another tipster said an in-country Microsoft reseller had awarded kickbacks to executives at a state-run telecommunications company in return for a software deal. Although there are numerous government-owned and -operated telecommunications firms in Russia, OJSC Svyazinves is the country's largest. As the nation's largest telecomm holding company, it controls eight subsidiaries. The state owns a majority of Svyazinves' shares.

The tips were sent to Microsoft in January and March of this year. The Wall Street Journal, citing "people familiar with the matter," said Microsoft had opened internal investigations.

Frank neither confirmed or denied that the company had launched its own investigations, but he did say that it has a 50-person staff "whose primary role is investigating potential breaches of company policy," signaling that the paper's account was accurate.

Unlike in his March statement, Frank yesterday did not recite the number of Microsoft's employees and partners -- the latter total is north of two-thirds of a million -- as an implicit claim that the bribes and kickbacks were the doings of rogues.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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