What you need to know

  • Microsoft will pay $26 million as part of a settlement involving a Hungarian kickback scheme.
  • Microsoft didn't admit or deny wrongdoing.
  • Microsoft employees sold software at discounts to resellers, and then the software was sold to the Hungarian government at a higher price.

Microsoft will pay $26 million as part of a settlement involving a kickback scheme in Hungary. Microsoft did not admit or deny wrongdoing, but the President and Chief Legal Officer at Microsoft, Brad Smith, said that the claims "involved employee misconduct that was completely unacceptable" as reported by the Washington Post.

It's claimed that Microsoft violated the Foreign Corrupt Practices Act. Several employees at Microsoft sold software to resellers at discounts, and then the same software was sold to the Hungarian government for higher prices. This happened from 2013 to 2015. When this story initially broke, Federal investigators probed if the finances earned from the scheme were used to pay bribes and kickbacks to government officials. Four Microsoft employees were fired as a result of Microsoft's own probe at the time and Microsoft also ended relationships with four partner companies in the country.

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Microsoft's settlement is with both the Justice Department and the Securities Exchange Commission. Microsoft's Hungarian subsidiary paid $8.75 million to the Justice Department and entered into a nonprosecution agreement with the department. The rest of the money was paid to the SEC. Microsoft agreed to a cease-and-desist order with the SEC.

Microsoft will not undergo monitoring going forward. According to the Washington Post, Microsoft stated that there were three countries involved with this situation. Microsoft's Smith stated that Hungary was "where the most concerning conduct took place." Microsoft did not share a comment on if any other investigations are ongoing.

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