MICROSOFT to PAY 25 MILLION & CRIMINAL FINE to SETTLE US CHARGES in BRIBERY CASE

NEW YORK (Reuters) - Microsoft Corp agreed on Monday to pay about $25.3 million, including a criminal fine, to settle U.S. charges it made improper payments that were used to bribe government officials in Hungary and other countries.  No one apparently gets jail time.

The U.S. Department of Justice said Microsoft Hungary will pay the $8.75 million criminal fine, as part of a three-year non-prosecution agreement in which it “admits, accepts and acknowledges” responsibility for employees’ misconduct. 

Microsoft also agreed to pay nearly $16.6 million to settle related civil charges by the U.S. Securities and Exchange Commission over its activities in Hungary, Saudi Arabia, Thailand and Turkey, without admitting wrongdoing. 

Both settlements resolved charges that Microsoft violated the federal Foreign Corrupt Practices Act, after the Redmond, Washington-based company failed to properly account for the improper payments in its records. 

In an email to employees, Microsoft President Brad Smith said the settlements “involved employee misconduct that was completely unacceptable,” and said the “small number” of employees involved in Hungary were no longer with the company. 

“There is no room for compromise when it comes to ethical business practices,” Smith said in the email’s subject line. 

Prosecutors said the Hungarian scheme generated at least $14.6 million of improper profit for Microsoft between 2013 and 2015, in connection with the sale of software licenses to Hungarian government agencies. 

Executives and employees at Microsoft Hungary, which is based in Budapest, were accused of falsely telling Microsoft that steep discounts were needed to complete the transactions. 

Prosecutors said the savings should have gone to customers, but were instead used by intermediary resellers in part to pay bribes to government officials, with Microsoft recording the discounts as legitimate business expenses. 

The SEC accord also resolved charges over improper travel and gifts to officials in Saudi Arabia and Thailand through “slush funds” maintained by third parties, and an unexplained discount on a transaction involving Microsoft’s Turkish unit. 

“We will hold subsidiaries and, where appropriate, the parent corporations accountable wherever FCPA violations occur,” U.S. Attorney Geoffrey Berman in Manhattan said in a statement. 

Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama, Dan Grebler and Susan Thomas

MICROSOFT BUYS UNIT 8200 AI BOUTIQUE for CLOUD APP SECURITY WHICH BOLSTERS ISRAEL

 ^{Israel’s Innovation Authority released its from start-up to smart-up nation report on technology and AI, including challenges.} 

^{(From January 2019). And Microsoft, since engineer Satya Nadella became CEO, has shifted towards the cloud, AI and new industries/technologies – Azure is a big driver of the business and initiatives such as the partnership with Blackrock around retirement are opening doors to new industries.} 

^{Lastly, we discussed how Israel’s famous Unit 8200 has been responsible for a number of the most innovative and advanced startups for AI and technology, with high profile examples like NSO making front page news.}

<sup>Let’s combine them all. Back in 2002, Microsoft hired Shelly Landsmann as Defense Sector Manager for Microsoft in Israel when she graduated Bar-Ilan University/Technion. Fast forward a decade plus and she becomes General Manager for Microsoft in Israel after acquiring startup Adallom. 
Adallom was founded by three young intelligence officers within the Israeli Intelligence Corp/Unit 8200after their Technion studies. They started the company out of the military in 2012 and sold it for around $320 million in the summer of 2015. Assaf Rappaport is now the GM for Microsoft R&D, and Ami Luttwak is the CTO for the unit. 

Great coup for these young engineers, including access to Azure’s and Microsoft’s resources, and part of Microsoft’s strategy to buy cybersecurity companies to create their own security tools. In 2016 they renamed the company Microsoft App Cloud Security. 
In more than one ways this is a blueprint: for young startups to get a big check and plug into larger organizations resources; for large firms to acquire unique tech and talent; and for industries to transcend their old ways.</sup> 

^{Microsoft CEO Nadella has been betting the company on AI, as have Amazon, Google, Facebook, AQR, JP Morgan, RenTech, IBM, and others.}

^{Read More:} 

https://warrenenskat.com/microsoft-buys-unit-8200-ai-boutique-for-cloud-app-security-and-to-build-up-israel/