'Whistblower' Claims Microsoft Staff, Officials From Middle East, Africa Engaged in Kickback Schemes
© REUTERS / Mike Segar
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Microsoft previously had to pay $25.3 million in fines in 2019 for violating the US Foreign Corrupt Practices Act for allowing bribery and kickbacks in Hungary, Saudi Arabia, Thailand, and Turkey in the process of selling its products to local authorities.
Yasser Elabd, who claims to be a former Microsoft employee, has accused his former co-workers, in a post published on the whistleblower platform Lioness, of engaging in kickback schemes with the company's licensing partners and officials from Middle Eastern and African states, and the Microsoft leadership of covering up these violations pursuable under the US Foreign Corrupt Practices Act.
Elabd started to suspect misconduct after he noticed that despite his numerous promotions at the company and an impressive trek of high productivity at the sales department, he could not afford the luxurious cars and homes that some of the younger employees who held lower positions were buying. He finally raised his concerns with the superiors in 2016 after he received a request of $40,000 to accelerate closing a deal from one of the Licensing Solution Partners, who were helping Microsoft sell its products in various regions.
"The customer did not appear in Microsoft’s internal database of potential clients. On top of that, the partner in the deal was underqualified for the project’s outlined scope, and he wasn’t even supposed to be doing business with Microsoft: he had been terminated four months earlier for poor performance on the sales team", Elabd says.
The whistleblower addressed one of his supervisors, and after seeing no action, moved further – to the human resources and legal departments, and eventually, after the latter did not investigate the partner, to the Microsoft CEO Satya Nadella. After emailing Nadella, Elabd was contacted by one of the company's vice-presidents, who told him that he just "booked a one-way ticket out of Microsoft".
Elabd says that he was left off all the important deals and finally sacked in 2018 after he refused to undergo a "performance improvement plan" after being "one of the highest performers on the team" for years, according to his own description. The whistleblower believes that his sacking was prompted by him continuing to ask "too many questions".
He did not see the full picture at the time, but two years after he left Microsoft, a former colleague from Saudi Arabia began sending him emails and internal documents, which unveiled the deep corruption in Microsoft, Elabd claims.
Kickback Scheme Involving Government Officials
According to the whistleblower, one of the biggest accounting firms, PricewaterhouseCoopers, conducted an audit of the company's licensing partners, which helped Elabd reconstruct the kickback scheme, which he believes resulted in $200 million a year redistributed between Microsoft employees, partners and various government officials.
Elabd believes that Microsoft executives or salespersons were offering side agreements to the partners and the decision-makers in the governments of Middle Eastern and African states, which involved them requesting discounts on the company's products and Microsoft formally proposing it. However, despite that, the respective governments would pay for the contract in full, and the sum that should have been discounted would then be redistributed between the participants of the scheme, Elabd claims.
"In my estimation, a minimum of $200 million each year goes to Microsoft employees, partners, and government employees. Experience leads me to believe that 60–70 percent of the company’s salespeople and managers in the Middle East, Africa, and parts of Europe are receiving these payments. Among the customers who I believe have received this money are government officials in Ghana, Nigeria, Zimbabwe, Qatar, and Saudi Arabia", the whistleblower says.
The former Microsoft employee claims to have found evidence of this misconduct in several transactions. Namely, the Saudi Ministry of the Interior paid an extra $13.6 million in 2019 for the company's products, he says.
In some cases, the deals with Microsoft should not have taken place in the first place, but still went through presumably due to the actions of the corrupt officials, Microsoft staffers and their licensing partners, Elabd says. For example, Qatar’s Ministry of Education was paying $9.5 million annually over seven years for Microsoft Office and Windows licenses. However, these licenses have never been used, the whistleblower claims.
"In a 2015 meeting with members of the Nigerian Parliament, the president of the Senate complained to me that the government had paid $5.5 million for Microsoft licenses for hardware they did not possess. This should never have happened, because Microsoft’s standard practice was to meet with the National Assembly’s IT department and financial controller to check the number of computers needing licenses before submitting any proposal."
Elabd believes these were not isolated incidents and that Microsoft executives know about the schemes. He recalled that Microsoft was fined by the US over allowing bribery in deals with the governments of Hungary, Saudi Arabia, Thailand, and Turkey. The whistleblower says that he forwarded his findings to the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), but both have so far declined to investigate them. Elabd claims that the two agencies cited an inability to gather more evidence on the matter abroad due to the "pandemic" and criticised the failure of the SEC and DOJ to act on his suspicions.
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