Microsoft Whistleblower Alleges Corruption, Financial Corruption Schemes: SEC and DOJ Reluctant to Investigate?

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In a recent article, Microsoft whistleblower Yasser Elabd says corruption and bribery are rampant at the tech company. He writes that he was retaliated against and eventually quit his job after working for the company for twenty years after trying to raise concerns about the unlawful behavior. Elabd also claims that it has filed complaints and evidence of these practices with the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ), but the agencies seem uninterested in pursuing its claims. allegations.

Elabd was recruited to work for Microsoft in 1998 and “helped bring the company’s products to market throughout the Middle East and Africa for the next 20 years,” his post states. He has established contracts and sold “licenses and solutions” to government agencies around the world. Elabd explains that Microsoft is able to achieve considerable growth in this way by using a “network of partners known as Licensing Solution Partners, who are authorized to engage with large public customers because they have certain technical skills and commercial”. According to Elabd, these partners “would then take a share of Microsoft’s license sales revenue, typically 10-15%.”

In its article, Elabd writes, “One way for Microsoft to strike deals with these partners is to create a business investment fund to pay for training or pilot projects that could cement longer-term deals. As Director of Public Sector and Emerging Markets for the Middle East and Africa, I oversaw applications for these funds. »

It details a case in 2016 in which “a request for $40,000 was made to expedite the conclusion of an agreement in an African country”. The request raised red flags for Elabd, which noted that “the client did not appear in Microsoft’s internal prospect database” and that “the agreement partner was underqualified for the described scope of the project”. In fact, the partner was technically not allowed to do business with Microsoft because “he had been terminated four months earlier for poor performance within the sales team.”

He raised his concerns about the request “with the Microsoft Services Architect who drafted the request” and then escalated the issue to his manager and the human resources and legal departments. “I took the business investment fund very seriously and wondered why we would give money to a partner who couldn’t achieve the desired results,” Elabd writes. “Legal and HR teams have halted the $40,000 spend, but to my surprise they did not further investigate the Microsoft employees who orchestrated the bogus deal.”

Elabd writes that the Microsoft Services Architect lead to whom he initially raised his concerns was “angry that [Elabd] bypassed it. This manager quickly became the head of Elabd and, in a one-on-one meeting, told Elabd that “our job is to bring as much revenue as possible to Microsoft.” The manager told Elabd: “I don’t want you to be a blocker. If any of the subsidiaries in the Middle East or Africa do something, you have to turn your head and leave it as it is. If something happens, they will pay the price, not you.

According to his post, Elabd responded to the manager saying he wouldn’t be a blocker “unless it violates company policy,” which infuriated the manager even more. “He shouted that I was not able to do this job and that I could not do business. But my record of 18 years spoke for me,” writes Elabd.

Elabd then met the manager’s boss, who was vice president. The VP suggested a meeting with all three parties, but after the meeting never took place, Elabd emailed Microsoft CEO Satya Nadella and a human resources manager, informing them that he “felt mistreated by this official”. The VP Elabd spoke to before told Elabd that by looping Nadella, he “booked a one-way ticket from Microsoft.”

Elabd describes being retaliated against after this exchange, being excluded from major transactions and prevented from attending work trips. “A general manager told me that people freaked out when I came to the branch offices and that I had become ‘one of the most hated people in Africa’. It wasn’t until later that I realized it was because I had asked too many questions; I was stopping people from taking money from their offers,” Elabd writes.

Microsoft then put Elabd on a “performance improvement plan”. The company fired Elabd in June 2018 after it “refused to recognize the plan”. He expresses that he was initially “shocked to be fired” given his accomplishments at the company. “But in 2020 a much clearer picture emerged as to why the leaders had wanted to shut down my lines of questioning. A former colleague based in Saudi Arabia who had been upset by what he had seen happening at Microsoft began to send me emails and documentation – and I learned that the corruption was much deeper than I didn’t suspect him.

Elabd writes: “In reviewing a multi-partner audit conducted by PricewaterhouseCoopers, I found that when agreeing to a product’s terms of sale or contract, a Microsoft executive or salesperson offered a side deal. with the partner and the purchasing entity decision maker. This customer-side decision maker would send an email to Microsoft requesting a rebate, which would be granted, but the end customer would pay the full fee anyway. the rebate would then be split among the conspiratorial parties: the Microsoft employee(s) involved in the scheme, the partner, and the purchasing entity’s decision maker, often a government official.” This meant that the individuals involved in the schemes would pocket Elabd writes about cases in different countries in which rebates of millions of dollars “were not passed on to end customers”.

“If an audit were conducted for all the partners using these practices, I think the sums of money stolen would be enormous. Where did those millions of dollars go? Elabd questions. Additionally, the documents provided by Elabd’s former colleague “clarified other situations that had alerted me years before.” It describes instances in which Microsoft customers, in these cases public entities and foreign government agencies, complained about paying for Microsoft licenses they did not have.

Elabd alleges that “[a]Another common practice was to create fake purchase orders, which sales managers presumably used to increase their compensation. In 2017, it was suspected that a sales manager had forged the signature of the deputy minister of the Saudi National Guard on a fake Microsoft purchase order. I have evidence that members of Microsoft’s legal, HR, and finance teams, as well as public sector officials in the region, were aware of this tampering. Elabd writes that he heard that after the sales manager threatened to expose the corruption he witnessed, “Microsoft paid [the sales manager] to leave quickly and quietly, took no legal action against him, and did not report the fake.

There are five other former Microsoft employees, Elabd claims, who faced retaliation for raising concerns “about inconsistencies in finances.” He alleges that Microsoft turns a blind eye to acts of corruption and provides other examples of allegations of corruption within the company. He points a $25.3 million settlement Microsoft paid DOJ and SEC in 2019: Settlement resolved allegations that Microsoft violated the Foreign Corrupt Practices Act (FCPA).

But Elabd expresses surprise and concern that the SEC and DOJ “both refused to investigate Microsoft for the same types of bribes in the Middle East and Africa. They acknowledged my evidence (which I have submitted three times) but have not taken up the case, saying the current pandemic has prevented them from collecting more evidence overseas – although I have already provided documents which I believe show that Microsoft is in violation of the 2019 agreement and still participates in corrupt business practices in direct violation of US law.

His complaint to the SEC alleges that Microsoft violates the FCPA, but he writes that because the agencies have not yet investigated, they “gave Microsoft the green light.”

“Governments in the Middle East and Africa are wasting millions of public dollars on unused Microsoft products so that a select few officials, partners and employees can enrich themselves. Microsoft allows employees to steal from its own pockets and from the governments of the countries in which it operates to help consolidate its monopoly on the continent,” Elabd concludes. “As the director told me all those years ago, all that matters is that Microsoft makes as much money as possible. Employees who break the law in service of this goal live lavish lives, while those who speak are ostracized and expelled.

The FCPA, passed by Congress in 1977, is a US anti-corruption law that prohibits the payment of anything of value to foreign government officials for the purpose of gaining business advantage. It also contains accounting provisions that require publicly traded companies to establish and maintain books and records that accurately reflect the company’s transactions.

In 2010, the Dodd–Frank Actwho established the SEC Whistleblower Program, added whistleblower provisions to the FCPA. Under the SEC’s whistleblower programs, qualified whistleblowers, individuals who voluntarily provide the SEC with original information leading to successful enforcement action, are eligible for a monetary reward of 10-30% of funds recovered by the government. .

In response to Elabd’s allegations in a article from The edgeBecky Lenaburg, Microsoft Vice President and Assistant General Counsel for Compliance and Ethics, said, “We are committed to doing business responsibly and always encourage anyone to report anything they see that may violate law, our policies or our ethical rules. standards.”

“We believe we have already investigated and responded to these allegations, which date back several years. We have cooperated with government agencies to resolve any issues,” Lenaburg said in the post. In her comment, she also highlighted the company’s “commitment to ethical practices, highlighting the ‘business standards’ training that all employees are required to undergo, including specific coaching on how to report incidents. of corruption such as those described by Elabd”.

Read Elabd’s article here.

Read more corporate whistleblower news at WNN.

Read more international whistleblower news at WNN.

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