On charges of bribery in India, Turkey, and the UAE, Oracle is fined over $23 million by the Securities and Exchange Commission

On charges of bribery in India, Turkey, and the UAE, Oracle is fined over $23 million by the Securities and Exchange Commission

Oracle Corporation has been fined over $23 million by the US Securities and Exchange Commission (SEC) in what is the second bribery case in India in a decade for violating provisions of the Foreign Corrupt Practices Act (FCPA). It created and used slush funds to bribe foreign officials for business purposes between 2016 and 2019 through subsidiaries in India, Turkey, and the United Arab Emirates (UAE).

During a transaction with a transportation company controlled by the Indian Ministry of Railways (“Indian SOE”), Oracle India used an excessive discount scheme. The sales team members involved in the agreement said in January 2019 that there was fierce competition from other original equipment manufacturers and that the business would be lost without a 70% reduction on the software component of the deal.

According to the article, Oracle required a staff member situated in France to accept the request because of the scale of the discount. The employee agreed to the reduction without requesting more supporting documentation. Oracle India had no rivals, according to the Indian SOE’s publicly accessible procurement website, as Oracle goods were required for the project.

A spreadsheet that was kept by one of the salespeople participating in the deal showed that $67,000 was the “buffer” that may be used to pay a certain Indian SOE official. A company with a history of bribing SOE officials received a total of about $330,000, and $62,000 went to a company that was under the control of the sales representatives involved in the deal.

This is the second time Oracle has received a fine for such reasons. In 2012, Oracle settled allegations that it had utilized Oracle India to generate millions of dollars in supplemental income that may have been used for illegal activities.

According to Charles Cain, the FCPA Unit Chief for the SEC, “the formation of off-book slush funds inevitably gives rise to the danger that that money may be spent unlawfully, which is exactly what happened here at Oracle’s Turkey, UAE, and India subsidiaries.” This situation emphasizes how important it is for a corporation to have efficient internal accounting controls throughout every aspect of its operations.

Oracle consented to stop and desist from violating the FCPA’s anti-bribery, books and records, and internal financial controls requirements. In addition, it agreed to pay a $15 million fine and around $8 million in disgorgement without acknowledging or disputing the SEC’s allegations.

Oracle spokesperson Michael Egbert stated, “If we find such activity, we will take necessary action. The conduct described by the SEC is opposed to our fundamental principles and explicit standards.

The Austin, Texas-based Oracle Corporation is a global American company that specializes in computer technology. According to sales and market capitalization, Oracle was the third-largest software firm in the world in 2020. 

Data management software, cloud-based systems, and enterprise software products (primarily its brands) are among the products the company sells. Software products include enterprise resource planning (ERP), human capital management (HCM), customer relationship management (CRM), enterprise performance management (EPM), and supply chain management (SCM) software.

Oracle was penalized by the SEC in 2012 for setting up slush funds. At that time, Oracle India created millions of dollars in slush funds, increasing the likelihood that the money would be used for illicit purposes.

According to Charles Cain, the head of the SEC’s FCPA branch, “the formation of off-book slush funds inevitably gives rise to the danger that that money may be utilized unlawfully, which is exactly what happened here at Oracle’s Turkey, UAE, and India subsidiaries.” This situation emphasizes how important it is for a corporation to have efficient internal accounting controls throughout every aspect of its operations.

Oracle agreed to stop and desist from breaking the FCPA’s anti-bribery, books and records, and internal financial controls provisions, although it did not admit or deny doing so. An $8 million disgorgement and a $15 million fine were paid in total.

Oracle’s vice president of corporate communications, Michael Egbert, stated: “If we find such behaviour, we will take necessary action. The SEC’s alleged action is counter to our guiding principles and explicit requirements.

David Reece oversaw the SEC inquiry, which was carried out by Samantha Martin and Laura Bennett. The Securities and Exchange Board of India, the Emirates Securities and Commodities Authority, and the Capital Markets Board of Turkey have all been helpful, and the SEC is grateful for their support.

Edited by Prakriti Arora