Microsoft Corporation, headquarted in Washington, developed, licensed, and supported a wide range of software and services, among other things. Microsoft’s stock was registered with the SEC and traded on the NASDAQ. Microsoft sold and marketed its software and services worldwide through wholly-owned subsidiaries, including subsidiaries in Hungary, Ireland, Saudi Arabia, Turkey, and Thailand.
Microsoft Magyarorszag Szamitastechnikai Szolgaltato es Kereskedelmi Kft. ("MS Hungary") was Microsoft's direct, wholly-owned subsidiary in Hungary.
According to the documents in this case, from at least 2013 through 2015, MS Hungary provided payments intended for Hungarian government officials in order to obtain business for Microsoft. The payments were made through third party vendors, consultants, distributors and resellers, which Microsoft called Licensing Solution Partners. The payments were funded through excessive discounts that Microsoft’s senior executives in Hungary approved based on vague justifications without ensuring the discounts were passed on to the end government customers.
On July 22, 2019, MS Hungary entered into a non-prosecution agreement with the DOJ. Under the terms of the agreement, MS Hungary agreed to pay a criminal fine of $8,751,795, which the DOJ noted reflected a 25% reduction off the bottom of the sentencing guidelines range. The reduction was based on Microsoft and MS Hungary's cooperation and remediation, though the company did not receive credit for self-reporting the matter to the agency. Under the agreement, the DOJ also required Microsoft and MS Hungary to self report on the status and implementation of the company's enhanced anti-corruption compliance for a term of three years.
In a related administrative proceeding settled on July 22, 2019, the SEC ordered Microsoft to cease and desist violations of the books and records and internal controls provisions of the FCPA. In addition, the SEC ordered the company to pay disgorgement of $13,780,733 plus prejudgment interest of $2,784,417.92. The SEC issued no civil penalty in light of the $8,751,795 criminal penalty that Microsoft's Hungarian subsidiary paid in a parallel non-prosecution agreement with the DOJ.
