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02.16.10

Did Microsoft Pay Millions of Dollars to Hide Information About Financial Malpractice?

Posted in Deception, Finance, Fraud, Microsoft at 8:07 am by Dr. Roy Schestowitz

Money on a dark desk

Summary: On the face of it, Microsoft essentially bribes its former CFO to keep quiet about what he knows; the mainstream press reveals some very damning information

THIS morning we wrote about Microsoft tax dodge/evasion which was facilitated by a former Microsoft general manager who is now working for the government. A couple of years ago we also wrote about Microsoft paying millions of dollars for a former employee to keep quiet about financial fraud that he exposed. Charles Pancerzewski was paid $4 million to keep quiet [1, 2]. If his allegations were flawed (which they were not, as there was concrete evidence that the judge accepted and the SEC then stepped in), why would Microsoft shell out so much money for his silence?

According to this new article from CFO.com, Microsoft’s previous CFO, who abruptly quit the company a few months ago, mirrors some of the above. Microsoft gave him a gift of $1.9 million. [via Joseph Tartakoff]

The sum, to be paid in two equal installments on December 31, 2009, and March 31, 2010, comes in exchange for promising not to sue or otherwise disparage Microsoft after his departure, the tech giant recently disclosed in its most recent quarterly filing with the Securities and Exchange Commission.

Such payouts are often written into employment contracts at the outset of a CFO’s tenure as protection from the career risks of making big gambles on corporate strategy. But some experts say Liddell’s was out of the ordinary since he did not have an employment contract or other explicit promise of such a sum. In fact, Microsoft’s most recent proxy, filed at the end of September, claims its top executives “are not entitled to any payments upon termination of their employment or following a change of control of Microsoft” except under certain conditions that did not apply to Liddell. (Speaking through a GM spokesperson, Liddell said he would have no comment.)

[...]

While that raises questions about why Liddell might have left Microsoft after four and a half years there, at least part of the “quo” is spelled out in the extremely detailed resignation letter Liddell signed, also filed with the SEC.

The letter contained all the standard promises, such as that Liddell would not sue or disparage the company or disclose any of its secrets, but with some language that is highly specific for such contracts.

Wow.

“No reporter worth there salt should have been reporting unaudited numbers. They should have learnt their lesson from Enron.”
      –Oiaohm
Microsoft essentially faked its financial results at the end of last month [1, 2, 3, 4]. This is something that we showed.

As our reader Oiaohm pointed out two weeks ago (in IRC), “Now I know what the problem is. (Unaudited) cannot be entered into sharemarket trackers… Now big question why in 31 days they could not got their reports Audited that is a big thing. I don’t know the USA sharemarket audit requirements… Here its use a government and asx approved firm for auditing. Does not cost much as long as you have all you paperwork in order… Problem I have with those MS numbers since they are not audited they can be doing a big E… No reporter worth there salt should have been reporting unaudited numbers. They should have learnt their lesson from Enron.”

It looks rather possible that Microsoft is still committing financial fraud. The article above confirmed a long-held suspicion backed by a lot of evidence. It’s not far fetched at all for a company that allegedly has orgies and drug parties these days [1, 2]. Perhaps it’s time for the SEC to pay Microsoft another visit (as it did some years ago after another case of financial fraud that Microsoft had paid to suppress).

A lot of people blew the whistle on Bernard Madoff but their complaints were repeatedly ignored for Madoff had the reputation of a rich man. Only when he turned himself in did regulators take this seriously. Given that a Microsoft shareholder compared Ballmer and Bill Gates to Bernard Madoff just a year ago, it’s probably time to investigate. The “shut up” money that Microsoft paid Chris Liddell ought to be overridden by the law’s needs.

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A Single Comment

  1. uberVU - social comments said,

    February 17, 2010 at 12:06 pm

    Social comments and analytics for this post…

    This post was mentioned on Identica by schestowitz: Did #Microsoft Pay Millions of Dollars to Hide Information of Financial Malpractice? http://ur1.ca/mhp0 seems possible…

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