EIM: We refused Microsoft's orgies and paid for it

Microsoft: We terminated relations with EIM because of incorrect reports about software sales by EIM.

Relations between EIM Computerized Technologies Ltd. and Microsoft Corporation (Nasdaq: MSFT) have always been sensitive, but EIM's statement of defense in a lawsuit against the software giant sets a new standard.

EIM, was one of Microsoft's largest distributors in Israel until mid-2005, when their contract expired. In the statement of defense filed with the Tel Aviv District Court, EIM claims that its relations with Microsoft broke down because EIM's employees refused to participate in sex and drug orgies on a cruise organized by Microsoft in May 2005 for its Israeli and Turkish distributors.

EIM alleges, "For the pleasure cruise, Microsoft, or people on its behalf, invited women who provided sexual services for money. During this cruise, the Microsoft representative encouraged the participants in the cruise to party with these women, including receiving said services. They were also offered banned substances."

EIM claims that Microsoft executives in the US present on the cruise did not object to these actions.

These allegations will not surprise anyone following the legal dispute between the companies since 2006. In the original lawsuit filed by EIM in November 2006, the company claimed that the refusal of its representatives to participate in "certain activities" during a cruise resulted in "displeasure by Microsoft".

Microsoft stated in its statement of defense filed in November 2009 that "we cannot comment on such general claims", and denied the relevance for the decision not to sign a new distribution agreement with EIM.

The dispute involves two lawsuits, one in Israel and the other in Ireland. EIM, a public company traded on the Tel Aviv Stock Exchange (TASE) at the time, reported that Microsoft had not renewed the company's distribution agreement, which would cost the company half of its revenue. EIM therefore sued Microsoft for NIS 10.5 million for the consequent "severe and irreversible damage".

Microsoft says that it terminated its relations with EIM because of incorrect reports about software sales by EIM. Microsoft accused EIM of "clear fraud".

When Microsoft terminated its contract with EIM, it filed a $2.5 million lawsuit with an Irish court against EIM for breach of contract. EIM has since been trying to get the venue changed to Israel.

Microsoft said in response, "This is not worthy of comment."

Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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