Microsoft: Hungarian software businesses were the models for corruption

The American investigation, examining Microsoft’s Hungarian businesses, has demonstrated through two software acquisition cases how corruption could be operated at the software firm’s Budapest subsidiary.

The investigation reached a settlement without a lawsuit, and the firm has to pay a $8.8 million (which is 2.6 billion forints) fine. The United States Department of Justice still published the full transcript of the settlement with Microsoft Hungary, reported 24.hu.

The authorities were investigating a period from 2013 to 2015, as it can be seen in the transcript. The amounts of the acquisitions are published in the report. In many parts, they wrote word-for-word which managers and employees manipulated the transactions. They only left out the names and the other firms concerned.

Based on the parameters of the acquisitions, Ákos Hadházy, an independent member of the National Assembly, identified the two transactions which had become the models of corruption in the American report.

“Since they were tricky and left out the contracts from under the acquisitions, it took a lot of investigating to identify the two organisations from the report, but the result is obvious: one of the acquisitions was from the IT firm of the Ministry of Home Affairs, the other from the National Police Headquarters,” stated Hadházy.

One of the example transactions in the report is from 2013:

• Microsoft knew in advance which public body and for how much money wanted to buy software,
• the Hungarian subsidiary granted a discount at the American headquarters, which, in the final price, was not checked for validation, so, a 34% price-gap appeared because of the discount
• the Hungarian distributor and the state institution signed the contract on July 30, with a €2.36 million purchase price.

Based on this, it is obvious that acquiring NISZ ZRT., an IT firm of the government that belongs to the Ministry of Home Affairs, was the transaction. On NISZ’s list of contracts of over 5 million, it can be seen that the firm made a contract of 710 million forints (€261,815) on July 30, 2013 with Humansoft Kft. for the delivery of the Microsoft-licenses.

The state-owned corporation is one of Hungary‘s leading IT firms, with a 63 billion traffic, and 1,600 employees.

Humansoft Kft. was one of the biggest Hungarian distributors of Microsoft between 2015 and 2016. Humansoft also led one of the consortiums, which, as one of the winners of a €61,1 million public procurement, could supply software licenses from ministries and financial bodies. They never got the chance to do this, however, as the parent firm went under an investigation three years prior, and contact with the firm – as well as all other Hungarian distributors – was cut off in the process. Back then, Humansoft belonged to László Szíjj’s interests, then to Lőrinc Mészáros via 4iG, and at the beginning of the year, it also merged into the new favourite IT firm, which Gellért Jászai gained leadership over in the past couple of months.

According to Hadházy, based on indirect information, the Police Headquarter’s contract can be identified, too. Direct identification is not possible because the contracts from the time period in question are missing from the police’s website.

Microsoft Hungary started cross-checking the businesses with the state institution about the 10,000 software licenses in the beginning of 2014. An employee knew in January already that the institution would have €3.76 million for acquisitions, which was announced on September 1, and the contract was signed on October 30. The police’s transaction was also through Humansoft Kft.

The Hungarian Microsoft argued that without making the discounts at the American headquarters, they would not be able to reach agreements, but the state firms did not get these discounts in either cases. The extra profits made on these business deals were then consumed by the collaborating firms in privileged positions.

Source: https://24.hu/