Microsoft is tied to Hundreds of Millions of Dollars in Foreign Bribes, Whistleblower Alleges
GadgeteerZA · news.movim.eu / gadgeteerza-tech-blog · Monday, 28 March, 2022 - 09:59 · 3 minutes
Although Microsoft claims this was 'dealt' with a while ago, the question should be asked whether it was criminally investigated. Otherwise, this would be much like the UK Government whitewashing their own Christmas parties during lockdown.
I spent many years doing IT business within government, and although I was never approached with a potential bribe, I did witness a lot of unethical practices around Microsoft deals, and I watched Microsoft's grip get ever tighter and wider across Government (below is my own opinion based on my experiences and e-mails):
- In South Africa, although Microsoft had offices in the country, they insisted in invoicing from their Ireland HO in US$. This meant they did not collect or pay any VAT within the country (unlike other suppliers). This had a twofold effect: Their prices appeared cheaper than competitors, but the client departments were not reminded that they were supposed to go declare and pay the VAT themselves. A third issue is that the bulk of the funds went out as Forex, with only the few percent markup being returned in Rands to pay the resellers. This was confirmed with the Revenue officials. You can blame the government departments, but as the seller, MS was not giving the whole picture.
- The MS Enterprise Agreement signed with SA government was supposed to be an enabling agreement (similar to the agreements with Oracle, SUSE, and others), yet most departments were under the impression it was a "contract" and they could just buy any new product off it without testing the market. There were certainly good competing products on other contracts for project management, operating systems, databases, e-mail, and more, yet the requests would go through as "existing contract". It was Treasury's intention that the market always be tested before purchasing a "new" solution. If you have bought the OS and MS Office, a project management solution is a new solution. Yet if a department were to consider buying off some else's contract, MS would be quick to point out the market must be tested first. Yes a lot of this is "advice" behind the scenes, but I do have one e-mail thread where this was thrashed out in writing with Microsoft. Again, though, one could blame the departments themselves, except for in my e-mail the Microsoft Reseller was vigorously defending their view.
- We all know South Africa had a MIOS interoperability standard approved. This was to ensure that any software implemented (whether FOSS, proprietary, cloud or otherwise) could exchange information using these international open standards. Yet we saw tenders going out with no requirements stated for interoperability (every tender is supposed to get a certification against standards). Again one could blame government officials as it is they who are supposed to apply this. But I have so often seen that departments are misguided by resellers who punt their product (often even stating it is the only available product - no it's not there are plenty of office suites, project management, e-mail solutions). Interestingly enough, we have an Eastern Cape District Municipality that runs fully on free and open source software - why only them, though?
"Advice" though, is a lot more subtle than actual bribery, and in many cases it is resellers who are at the forefront, not the OEM. Officials too are ignorant around firstly the detail of their own policies, but also in terms of market awareness (the latter also comes from speaking far and wide with other resellers). SA did create the State IT Agency to help fulfil some of this specialised knowledge gap, but even there the same effects were often present. There was even a point in time when some strong vendors stopped approaching IT officials, and instead targeted senior managers without technical experience. SA probably fell down a bit with not declaring strong open standards as well as potential default products to achieve them, with a special motivation required for anything else. The closer we move to cloud too, the more we will lose the specialised IT skills on the ground, as the concentration of expertise moves towards the cloud provider (including a looming and dreaded vendor lock-in if open standards are not seen to have priority over convenience). I see where it is going to end, and of course then the pendulum will have to swing the other way again...