Thread by @DawsonSField

Huh, Microsoft’s Hungarian division busted for a foreign bribery scheme. #ButNothingsHappening

https://twitter.com/TheJusticeDept/status/1153315128886124544

Microsoft paid bribes to Hungarian officials to rig bids & sell software licenses to government agencies.

Total fines of $25M from round 1, DOJ & SEC. I'm sure there will now be follow up investigations & evidence passed to foreign partners for them to prosecute next.

They are claiming the Microsoft executives in Hungary lied to the main office to conceal the bribery issues. But I find it unlikely that they would not notice the margins & other issues. This was a blind eye at a minimum!

Microsoft received a 25% reduction in it's fines for cooperating with the DOJ in this case. Which means that DOJ now has the receipts!

This case was brought by SDNY, and Microsoft Corporation also agreed to pay an addition $16.5M in fines for the SEC.

The agreement & statement of facts is available here...
justice.gov/opa/press-rele…

Oh, guess who was Microsoft's counsel in negotiating this deal with the Feds. Obama's Michael Cohen, Kathryn H. Ruemmler!

Ruemmler also represented Microsoft's Hungarian division!

Looks like they jumbled things through multiple divisions including Microsoft's Ireland division to camouflage the activity.

It looks like these deals were structured to make it impossible fore auditors to follow the money trail & decisively find where the money really went.
Wonder if MS was also venue shopping which division would sell the license for the purpose of tax avoidance?

Basically, Microsoft was using middlemen to do the sales & service of the software. They were giving the product to their middlemen at a discount, pretending they were discounting it to the government to win the bid, when in fact they were paying kickbacks to win the bid instead.

Microsoft through their attorneys managed to lay the blame on their Hungarian division, and agreed to cooperate & put in fraud detection & prevention measures. Which sounds like they are getting away a bit, but looks can be deceiving if this goes like so many other cases.

The documents provided during the cooperation & increased anti-fraud efforts will show that Hungary wasn't the only country this game was being played in. So over the next few years we will see many more cases spawn from this settlement.

This middlemen paying the bribes structure with licensing profits run through a tax haven were not isolated incidents. It was a structure built to hide dirty deals & pass the bribes down to the middleman! Microsoft has now signed it's life away that it is responsible for them!

You don't think Microsoft would use such a system in the US for federal contracting do you?
Huh, federal agencies have to go through a 3rd party licensing partner to buy from Microsoft.

cloudblogs.microsoft.com/industry-blog/…

Looks like Microsoft was busted in a similar scheme in Romania 5 years ago. This was overpaying for licenses for school computer software all the way back to 2004. You don't think schools & universities in the US are overpaying for software w kickbacks? zdnet.com/article/romani…

The Romania corruption scheme used the same mechanism. Microsoft agreed to the discount of the product, but the middleman got the government to overpay for the product, with the difference being money laundered to officials as bribes.

So Microsoft gives a 44% discount and about 44% of the total sale becomes $20M in bribes.

The FBI & DOJ have been looking into similar allegations in Italy & China since at least March of 2013! Amazing how those investigations were delayed by the Obama Justice Department & Obama's personal lawyer is Microsoft's counsel? What a coincidence! #ButNothingsHappening!

And earlier this year Microsoft had to end its relationship with a licensing partner who was making similar deals with the South African military!

Maybe it's just me, but I'm starting to see a pattern here! techcentral.co.za/eoh-microsoft-…

Looks like Microsoft corruption cases in Pakistan & Russia were also buried under the previous administration!

Oh look even a guest appearance by President Trump with a quote about him arguing in 2012 that the FCPA was bad for US business? You don't think he was laying bait?

Link for the about screenshot!
anticorr.media/en/microsoft-o…

Oh look, the Romanians escaped justice last year when corrupt officials fired the prosecutor then had a judge declare their were errors in the case. It is why you have to drain all the Swamps at once!
romania-insider.com/microsoft-case…

They convicted a few patsies, the Strzoks & McCabes in the case, but let the big players go.
Interesting that the vendor seems to be a division of Siemens. Siemens is facing bribery allegations in Brazil & China as part of the crooked govt healthcare cartel!

I wonder if this is related? HUD contracting employee ran a long scheme with an owner of a small tech firm that serviced federal & Washington DC city govt. agencies? justice.gov/usao-dc/pr/for…

It also reminded me of this story where a HUD assistant inspector general was indicted in June for covering up & participating in fraud on IT vendor contracts. HT to @oldmanluvsmineo who shared it with me a month ago!

https://twitter.com/TheJusticeDept/status/1144340780464713735?s=20

@oldmanluvsmineo The weird thing about that case is that one of the lead investigative elements was the Inspector General for the Intelligence Community. Why was the IGIC investigating an IG employee from HUD? I have no clue but it has to be an interesting story!

I wonder if either of these unnamed software vendors was a Microsoft licensing provider? I guess we will soon find out... #ButNothingsHappening!