SEC fines Oracle $23 mn for bribing officials in India, Turkey, and UAE

Tech giant Oracle has been fined $23 million for violating the Foreign Corrupt Practices Act (FCPA) by the US Securities and Exchange Commission (SEC). The firm created slush funds to bribe foreign officials in United Arab Emirates, Turkey, and India.

Referring to the company's India operations, the SEC said Oracle India's employees used "an excessive discount scheme" in connection with a transaction with a transportation company owned by the ministry of railways.

"The Securities and Exchange Commission announced settled charges requiring Oracle Corporation to pay more than $23 million to resolve charges that it violated provisions of the Foreign Corrupt Practices Act (FCPA) when subsidiaries in Turkey, the United Arab Emirates (UAE), and India created and used slush funds to bribe foreign officials in return for business between 2016 and 2019," the SEC said in a statement on Tuesday.

"In 2019, Oracle India sales employees also 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," the order said.

A para titled Improper Conduct at Oracle India in the SEC order adds, "In January 2019, the sales employees working on the deal, citing intense competition from other original equipment manufacturers, claimed the deal would be lost without a 70% discount on the software component of the deal. Due to the size of the discount, Oracle required an employee based in France to approve the request. The Oracle designee provided approval for the discount without requiring the sales employee to provide further documentary support for the request. In fact, the Indian state operated enterpriese's (SOE's) publicly available procurement website indicated that Oracle India faced no competition because 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 funnelled to an entity with a reputation for paying SOE officials, and another $62,000 was paid to an entity controlled by the sales employees responsible for the transaction."

This is the second time Oracle has been fined. The previous instance also included the tech major's India unit. In 2012 Oracle had resolved charges that pertained to creating a side fund of millions by the India unit, creating the risk that the funds could be used for illicit purposes, according to Moneycontrol. Of the $23 million, $8 million is in disgorgement, and the rest, $15 million, is the penalty.

"Without admitting or denying the SEC's findings, Oracle agreed to cease and desist from committing violations of the anti-bribery, books and records, and internal accounting controls provisions of the FCPA," SEC said.

In August 2012, SEC had charged Oracle "with violating the Foreign Corrupt Practices Act (FCPA) by failing to prevent a subsidiary from secretly setting aside money off the company's books that was eventually used to make unauthorized payments to phony vendors in India."

According to SEC's 2012 order, "Certain employees of the India subsidiary of the Redwood Shores, Calif.-based enterprise systems firm structured transactions with India's government on more than a dozen occasions in a way that enabled Oracle India's distributors to hold approximately $2.2 million of the proceeds in unauthorised side funds. Those Oracle India employees then directed the distributors to make payments out of these side funds to purported local vendors, several of which were merely storefronts that did not provide any services to Oracle. Oracle's subsidiary documented certain payments with fake invoices."

Oracle had agreed to pay a $2 million penalty to settle the charges.