Microsoft decides on audit to check up on distributors

Microsoft is checking up on its channel partners, with its authorised distributors being subject to audits. However, the software giant has denied that these audits are connected to a dispute about grey software being exported from the Middle East to the UK.

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By  Peter Branton Published  February 27, 2005

Microsoft is checking up on its channel partners, with its authorised distributors being subject to audits. However, the software giant has denied that these audits are connected to a dispute about grey software being exported from the Middle East to the UK. A distributor in the region said the company had to provide the auditors appointed by Microsoft with access to its complete sales records for the last two years. “This is the first audit we have had in over five years from Microsoft,” said Eliot Shepherd, marketing director at Tech-Data Middle East,which was being audited last week. Microsoft said partner audits are conducted at random intervals and that other distributors should expect to be audited if they have not been already. Microsoft UK has been embroiled in a legal dispute with a UK software distributor, ITAC, over allegations that it acted as a “rogue trader”. Microsoft UK has launched a US$7 million civil action against ITAC, claiming that it has been selling grey software, also referred to as parallel imports, which it has sourced from the Middle East. In turn, ITAC has announced its intention to sue Microsoft UK for libel, claiming the allegations against it are groundless. A spokesman for Microsoft South Gulf said there was no connection between this case and the current round of audits that are being undertaken in the region. “This is just standard, common practice,” said Haider Salloum, Microsoft South Gulf marketing manager. “All companies have to be very careful about compliance now, you have regulatory issues such as Sarbannes-Oxley which we all have to deal with. Such audits will become more common,” he added. Tech Data’s Shepherd said the company had been informed of the audits by a Microsoft executive, Thomas Hansen, who took over as caretaker channel manager for the region some time towards the end of last year. “He announced his intention to investigate what was going on and notified us of Microsoft’s intention to carry out an audit in February,” Shepherd said. “Hansen visited us a few weeks before the auditors arrived and told us that he intended to qualify the real numbers from the region,” he added. Joe Devassy, who was the channel manager for the region, left Microsoft last year. Both Devassy and Microsoft South Gulf have denied that his departure was linked with the ITAC legal dispute. Microsoft said it was a matter between him and the company.

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