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Microsoft Corp. probes contracts of local unit

Microsoft Corporation has conducted an in-depth investigation at its local subsidiary Microsoft Magyarország Kft. While the results have not been made public, several connected details seem to point towards suspected corruption as the reason for the probe, online news portal 24.hu reports.

Microsoft headquarters in Redmond, Washington, delegated a group specialized in investigations to verify the contracts between Microsoft Magyarország Kft. and several institutions of Hungarian state administration. The internal investigation, conducted in collaboration with a Hungarian law firm, verified contracts signed over the course of several years, worth billions of Hungarian forints, 24.hu reports.

In response to inquiries by 24.hu, Microsoft Magyarország did not deny the internal investigations had taken place, but did not offer any further information. 

Microsoft Magyarország does not directly sell Microsoft products, but acts through intermediaries called Large Account Resellers (LARs), which also handle sales to government institutions. Until recently, Microsoft collaborated with four LARs, each with annual turnover of HUF 4-13 billion. Microsoft Magyarország also had a manager responsible for government relations, Viktor Sagyibó, until last year.

Sagyibó left Microsoft Magyarország in early 2016; last month he was appointed a commissioner by János Lázár, minister in charge of the Prime Ministerʼs Office. Sagyibó now has wide responsibilities, controlling all local and EU projects of the PMʼs Office.

Prior to that, Sagyibó worked for just two weeks as CEO of 4iG Nyrt., the parent company of one of the Microsoft LARs, Humansoft Kft. Sagyibó quit the CEO position for unspecified private reasons. According to 24.hu, however, Microsoft may have put pressure on 4iG to part ways with Sagyibó.

Less than a week after the appointment of Sagyibó to his government position, Microsoft Magyarország unexpectedly terminated the contracts with three of its four LARs. This means that as of now, Microsoft will not sell software, nor provide support for software, sold by Humansoft Kft., RacioNet Zrt. or Euro One Zrt., 24.hu reports.

In response to 24.hu inquiries concerning a possible connection between the appointment of Sagyibó in his government post and the cancelling of the contracts with the three LARs, Microsoft would only say that the company is looking for a "new direction" in its relationships with local partners.

While its reporting of the Microsoft investigation makes no direct reference to corruption in Hungary, 24.hu does point to another case in Romania involving Microsoft. Last year several former Romanian ministers were given prison sentences and had assets totaling EUR 17 million frozen for receiving significant bribes in exchange for software contracts 30-40% more expensive than the usual market price, and computer purchases overpriced by 50%.