The two former managers say the company retaliated by terminating their employment after they reported concerns about a subordinate’s expenses. The company denies the allegations.
Two former high-level managers at Microsoft have sued the company, alleging that their careers were derailed after they reported suspicious corporate expenses filed by an employee.
Eric Engstrom and Ted Stockwell, who filed the suit in King County Superior Court on Tuesday, contended that they were wrongfully terminated after the reporting concerns that a subordinate was improperly using company cash at South Korean “hostess bars” for services that may have included prostitution.
Microsoft denied the allegations.
“We’ve carefully reviewed this case and found nothing to substantiate the speculation in the complaint or the allegation of retaliation, and we’re confident a court will agree with us,” a Microsoft spokesman said in a statement. “We always encourage employees to raise concerns they may have, and take such reports seriously.”
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Stockwell joined Microsoft in 1987, working in the company’s operating-systems unit, and later at Web portal MSN.
Engstrom arrived at the company in 1991, and spent much of his tenure developing the DirectX multimedia-programming interface. He would go on to testify on behalf of Microsoft in the antitrust trial that regulators brought against the company, saying Microsoft hadn’t used strongarm tactics to squash competitors to its software that played Internet video and music files.
The pair both left the company in the late 1990s and returned in 2008, the complaint said.
Stockwell, while running an international division of the Bing search-engine group in early 2011, grew concerned about the size of the business expenses a subordinate had submitted for reimbursement, court documents said. The subordinate, who isn’t named in the filing, told Stockwell that the expenses, some in excess of $7,000, were incurred at meetings with corporate partners at hostess bars.
“Stockwell and Engstrom were both aware that in Korea and other parts of Asia, ‘hostess bars’ often provide sexual services to their customers,” the complaint said. Stockwell and Engstrom, his immediate supervisor, reported their concerns to a superior and human resources, the complaint said.
A human-resources manager later asked Stockwell to drop his complaint, according to the filing. Stockwell’s unnamed subordinate was subsequently transferred to another unit after an online services executive stepped in to dismiss the complaint against the employee, the filing said.
Stockwell and Engstrom were subsequently removed from a project they were working on at Bing, and were met with deteriorating performance reviews, the complaint said.
Both men later transferred to Microsoft’s online advertising team, and after further poor performance reviews were informed of their termination in December 2013. The complaint says their termination and poor reviews came despite apparent endorsements from peers and executives of some of the programs the two had championed.
“Everything went sideways for them after they questioned this invoice,” said Jack Sheridan, an attorney representing the pair.
Sheridan said they were seeking lost wages and benefits and other damages. The court set a schedule for a March 2016 trial.