The news was hardly broken before it began morphing into a corporate-political game of "he said, she said." According to several news reports, including one from that old Google (NASDAQ:GOOG) nemesis, Agence France Presse (AFP), Microsoft (NASDAQ:MSFT) has offered its second concession in as many years to the government of Indonesia.

Last year, we wrote several times to update Fool readers on the news, and to muse on the significance, of Microsoft's "Windows XP Starter Edition" initiative. In that program, the company agreed to develop a stripped-down version of its flagship computer operating system for use in a handful of mostly Southeast Asian countries where per capita incomes run as low as software piracy runs high. Among the countries where the XP SE could be purchased (pre-installed on a cheap PC) for a broken-out price of about $36 are Thailand, Malaysia, Russia, and Indonesia.

But there's something about that last country, it seems, that really puts the folks from Redmond in a generous mood. AFP reports that last month, Indonesian President Susilo Bambang Yudhoyono traveled to Seattle to meet with Microsoft Chairman Bill Gates (a veritable meeting of two heads of state). At that meeting, Gates reportedly agreed to extend an "amnesty" to departments of the Indonesian government that currently use as many as 50,000 pirated copies of various pieces of Microsoft software. In exchange for the amnesty, Indonesia would pay Microsoft a token fee -- which some sources put at as little as $1 per user -- to "legalize" the software. Furthermore, and more important for Microsoft, the Indonesian government will promise to crack down on software piracy within its country (and presumably, within its government) and to purchase legal versions of Microsoft software in the future.

Now, as far as the "he said, she said" angle of this story goes, at least two separate Microsoft spokespeople have been quoted denying that any such deal has been made. It's understandable why the company would not want news of this kind of amnesty becoming public (whether true or not). Any amnesty program, whether it's sponsored by Homeland Security, the IRS, or Microsoft (and whether real or imagined), offers hope to lawbreakers that if they can get away with their crime long enough, the powers-that-be will eventually concede defeat, offer them a slap on the wrist, and allow them to keep the proceeds of the crime. And that's certainly not the message that Microsoft wants to send.

Still, the AFP has a pretty reliable source for its story, quoting none other than Indonesia's Information Minister as praising the deal. As much reason as Microsoft has to deny making a deal with Jakarta, the Indonesian government has just as little reason to publicly admit that its officials are using pirated software. Unless, of course, the amnesty is for real.

For more on Microsoft's previous move to encourage legal software buying in the region, read:

Fool contributor Rich Smith owns no shares in either company mentioned in this article.