Microsoft under preliminary probe for foreign corrupt practices: reports

Microsoft is under preliminary investigation of the justice department as also the Securities and Exchange Commission into bribery accusations involving its operations in China, Italy and Romania, The New York Times reported, citing a person, who spoke on the condition of anonymity as the inquiry was a confidential legal matter.

The software giant's practices in those countries are under investigation for potential violations of the Foreign Corrupt Practices Act, a federal law passed in 1977 that prohibits American companies from making payments to government officials and others overseas to further their business interests.

In a blog post yesterday, John Frank, a vice president and deputy general counsel at Microsoft, said the company could not comment about continuing investigations, adding that it was not uncommon for such government reviews to find that the claims were without merit.

''We take all allegations brought to our attention seriously and we cooperate fully in any government inquiries,'' Frank said in the blog post. ''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. We also invest heavily in proactive training, monitoring and audits to ensure our business operations around the world meet the highest legal and ethical standards.''

The news of the investigations was broken yesterday by The Wall Street Journal on its web site.

Meanwhile, the USA Today's  technology correspondent Byron Acohido commented whether Microsoft actually were to get prosecuted for bribery relating to contracts in China, Romania and Italy might depend on "something of value" the software giant might have induced an official with, to influence his or her discharging of public or legal duties.

The article said salesmen by definition tried to influence customers into signing on the dotted line and Microsoft was nothing if ''not intense about closing deals''.

In 2004, CEO Steve Ballmer cut short a Swiss ski vacation to rush to Munich in a last ditch effort to dissuade city officials from rejecting a $36.6-million contract renewal for upgrades of 14,000 Windows desktop PCs.

Acohido said that documents obtained by USA Today at the time showed that Microsoft went on to cut its pricing to $31.9 million and further to $23.7 million - an overall 35 per cent price cut.

Also Ballmer also offered to let Munich go as long as six years, as against the normal three or four, without having to make another expensive upgrade, and added millions of dollars worth of training and support services with no additional cost, though eventually the contract was given toGerman Linux distributor SuSE and IBM, a big Linux backer, through a $35.7-million contract.