SEC fines Oracle over $23 million on bribery charges in India, Turkey and UAE

In what is the second case of bribery allegations in India in a decade, the US Securities and Exchange Commission (SEC) has fined technology firm Oracle Corporation over $23 million on charges that it violated provisions of the Foreign Corrupt Practices Act (FCPA) as its subsidiaries in India, Turkey and the United Arab Emirates (UAE), created and used slush funds to bribe foreign officials for business purposes between 2016 and 2019.

According to the SEC order, “Oracle India sales employees used an excessive discount scheme in connection with a transaction with a transportation company, a majority of which was owned by the Indian Ministry of Railways (“Indian SOE”). In January 2019, the sales employees working on the deal claimed the deal would be lost without a 70% discount on the software component of the deal, citing intense competition from other original equipment manufacturers”

The report said Oracle needed a France-based employee to approve the request due to the size of the discount. The employee approved the discount without asking for further documentary support. The Indian SOE’s publicly available procurement website indicated Oracle India had no competition as it had mandated the use of Oracle products for the project.

One of the sales employees involved in the transaction maintained a spreadsheet that indicated $67,000 was the “buffer” available to potentially make payments to a specific Indian SOE official. A total of approximately $330,000 was funneled to an entity with a reputation for paying SOE officials and another $62,000 was paid to one controlled by the sales employees involved in the transaction.

This is the second instance when Oracle has been fined on similar grounds. In 2012, Oracle resolved charges related to making millions of dollars of side funds via Oracle India, that carried the risk of being used for illicit purposes.

“The creation of off-book slush funds inherently gives rise to the risk that those funds will be used improperly, which is exactly what happened here at Oracle’s Turkey, UAE, and India subsidiaries,” said Charles Cain, the SEC’s FCPA Unit Chief. “This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations.”

Without admitting or denying the SEC’s findings, Oracle agreed to cease and desist from committing violations of anti-bribery, books and records, and internal accounting controls provisions of the FCPA and agreed to pay approximately $8 million in disgorgement along with a $15-million penalty.

“The conduct outlined by the SEC is contrary to our core values and clear policies, and if we identify such behavior, we will take appropriate action,” said Oracle spokesperson Michael Egbert.