In 2016, Yasser Elabd found that the $ 40,000 payment to an African client was incorrect. The payment was from Microsoft’s Business Investment Fund. This is the money to close a transaction and open up a new business. However, at least according to the internal client list, the customer specified in the request was not a customer at all. He was a former Microsoft employee and was fired because of his poor performance. He recently left the company and the rules did not approve him.
It was suspicious and more like a bribe than a proper business request, but when he requested the details, other managers began to push back. In the end, payments were discontinued, but with no broader results, few seemed interested in digging deeper. He came to believe that his colleagues were far more satisfied with this type of payment than he was.
In the next two years, Erabud says he did his best to eradicate these quiet bribes. This battle made him a paria among his colleagues and eventually sacrificed his work. But in retrospect, he believes Microsoft wasn’t interested in stopping payments and preferred to bypass fake contracts and accept relevant cash.
“They advertise bad people. If you’re doing the right thing, they won’t promote you.”
Elabd shared his experience in an essay released Friday by whistleblower platform Liones, claiming that bribes had spread through Microsoft’s overseas contract business. Elabd estimates that companies often spend more than $ 200 million annually on company-related bribes and rebates in countries such as Ghana, Nigeria, Zimbabwe, Qatar and Saudi Arabia. He believes that more than half of salespeople and managers participated in the area where he worked. If true, it’s a spectacular view of the ongoing corruption associated with international technology contracts and Microsoft’s ongoing struggle to contain it.
As director of emerging markets in the Middle East and Africa, Elabd saw many different versions of the problem. Sometimes, as in Africa, they were suspicious demands from business investment funds. In another example, we saw a Saudi Arabian Interior Ministry contractor receive a $ 13 million discount on the software, but the discount did not return to the end customer. In another case, Qatar’s Ministry of Education paid $ 9.5 million annually for Office and Windows licenses that were not installed. For some reason, money leaks out of the contract process and is probably split among governments, subcontractors, and Microsoft employees participating in the contract.
This type of corporate bribery is a widespread problem, especially in countries where the government is a major customer and mid-career bureaucrats view bribery as part of the cost of business. The World Economic Forum estimates that more than $ 1 trillion is lost in bribes around the world each year. It is difficult to estimate the part related to the fraud described by Elabd. In this part, international companies pay local decision makers to secure their businesses or consolidate fake deals to plunder the Treasury. Costs are usually borne by national taxpayers (often not in affordable countries) and diverted to bureaucrats and subcontractors rather than those who plan to help. However, a small portion of the money is not sent to the parent company as part of the plot, which unfortunately motivates them to close their eyes.
In 2019, Microsoft paid $ 25 million to settle foreign bribery claims
This is a challenge for multinationals, but from Elabd’s experience at Microsoft, Elabd thought the company had given up fighting it. “It’s happening at all levels,” he said in an interview with The Verge. “All executives are aware of it and they advertise bad people. If you’re doing the right thing, they won’t promote you.”
Microsoft solicited comments to emphasize its commitment to ethical practices and the “business standards” that all employees must take, including specific coaching on how to report bribery cases as described by Elabd. I pointed out the training.
Becky Lenaberg, Microsoft’s Vice President and Deputy Legal Advisor for Compliance, said: ethics. “We believe we have previously investigated these claims and addressed them. We worked with government agencies to resolve concerns.”
“I don’t want you to be a blocker,” his manager told him.
Microsoft has suffered from foreign bribes in the past. A Hungarian senior executive found that he had increased his margins as part of his bribery program between 2013 and 2015, according to a Judiciary investigation. Another SEC proceeding claimed that more than $ 440,000 of marketing funds had been diverted to gifts to Saudi Arabian government employees. Microsoft settled both proceedings in 2019 and paid the investigative agency a total of $ 25 million.
In an open letter to employees after the settlement, Microsoft President Brad Smith described the action as “totally unacceptable” and emphasized the need for strong internal oversight. “As a company, we need to continue working on improving systems that help prevent fraud,” Smith writes. “If we find something that seems inconsistent with our policies and values, we hope to draw our attention to it so that the small issues don’t grow.”
But Elabd’s essay tells another story. He says he escalated the issue and successfully stopped the first Nigerian request — but the broader issue was not addressed. Immediately, the manager who connected to the request called on him for a heated conversation.
“I don’t want you to be a blocker,” he recalls the manager who told him. When he found something suspicious, the manager said, “You need to turn his head and leave it alone.”
“Companies can’t bury their heads in the sand.”
In the months that followed, Elabd realized that he had stopped trading. A previously approved travel request was suddenly blocked. When he rejected the performance improvement plan, he lost his job and left Microsoft forever in August 2018.
Since then, he has tracked reports of bribery from Qatar, Cameroon and South Africa. All of this involves Microsoft and its subcontractors. He brought the report to the Securities and Exchange Commission in the hope that they would take action. However, he says there was little action from the authorities. (The SEC did not respond to requests for comment by the press time.)
This type of bribery is illegal under the Foreign Corrupt Practices Act, but prosecution tends to depend on multiple cases. Leah Moushey, Senior Associate of Miller & Chevalier, who focuses on the FCPA case, says prosecutions often focus on the company’s internal efforts to stop corruption. “They look to see if the compliance program is properly designed and implemented in good faith, and if there is evidence to support it working,” says Moushey.
But while a good process can forgive some bad cases, evidence of a bad process can lead to more severe punishment. This is a particularly serious threat, given the recent recurring focus of corporate criminals by the Justice Department. “If something goes wrong, the company can’t bury its head in the sand,” says Moushey. “If you are consciously ignoring the danger signals that are occurring within your organization, you may be held liable.”
It’s hard to say where Microsoft falls into this spectrum. In many cases quoted by Elabd, the company blocked payments and fired employees. If this is not the case, it is often due to the investigation not finding evidence of fraud. But for Elabd, the risk of losing a sales position is not enough to combat a broader culture of corruption.
“They didn’t take legal action against these employees, even though they knew they were stealing company and government money,” he says. “The hidden message to our employees is,’Do whatever you want to do and make as much money as you can. The worst thing that can happen is to get fired.”