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mslogoTwo longtime Microsoft employees have filed suit against the company over their terminations. The suit alleges they were the targets of internal retaliation after raising red flags about more than $7,000 in expenses submitted by an unnamed employee who was entertaining corporate partners at “hostess bars” in Korea.

Microsoft disputes the claims and says it believes it will prevail in court.

The suit by George (Eric) Engstrom and John (Ted) Stockwell says that the company launched an investigation based on their concerns that the employee might be expensing prostitution for the corporate partner executives — concerns that the unnamed employee denied. The suit says the employee was friends with high-ranking executives including Harry Shum, now the company’s executive vice president of technology and research.

Engstrom, who was one of the creators of DirectX, and Stockwell, a high-ranking Microsoft manager, say they experienced retaliation and negative performance reviews, in contrast with their past promotions and strong evaluations inside the company.

Microsoft said in a statement, “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. We always encourage employees to raise concerns they may have and take such reports seriously.”

As part of the complaint, the former employees confirm that Microsoft was working on a since-disbanded e-commerce project, code-named “Brazil,” to compete with Microsoft itself has never publicly acknowledged the plan, which was reported by the Wall Street Journal in 2013. The suit says that the project was subsequently revived in a different form.

Stockwell and Engstrom were let go in December 2013 and January 2014, according to the suit. Their complaint, alleging wrongful termination, was filed in King County Superior Court this week, as reported earlier by the Seattle Times and Reuters.

Here’s a copy of the suit.


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