Regulator fines Oracle $23m over bribery charges in India, Turkey, UAE

*The US Securities and Exchange Commission  has fined software major Oracle over $23 million for deploying slush funds to bribe foreign officials in violation of the regulator’s provisions of the Foreign Corrupt Practices Act between 2016 and 2019

Gbenga Kayode | ConsumerConnect

For using the global brand to get enmeshed in deploying slush funds for bribery and corruption in foreign lands, the United States (US) Securities and Exchange Commission (SEC) has fined software major Oracle Corporation over $23 million for using slush funds to bribe foreign officials, including those in the Indian Railways.

It was gathered that the allegations are from the period between 2016 and 2019, when the Oracle employees used deep discounts in different countries to further the use of their software.

Report indicates Oracle India also used slush funds in what was regarded as the second case of bribery allegations in India in a decade, SEC stated the charges slammed against the company violated provisions of the Foreign Corrupt Practices Act (FCPA).

Oracle’s 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, ET report said.

According to the SEC order, Oracle India sales employees used an excessive discount scheme during a transaction with a transportation company, a majority of which was owned by the Indian Ministry of Railways (“Indian SOE”).

The regulatory Commission said in January 2019, the sales employees working on the deal claimed the deal would be lost without a 70 percent discount on the software component of the deal, citing intense competition from other original equipment manufacturers.

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.

Charles Cain, SEC’s FCPA Unit Chief stated: “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.

“This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations.”

Oracle’s reaction to regulator’s penalty

In reaction to SEC’s over $23 million fine, Oracle Spokesperson Michael Egbert reportedly said: “The conduct outlined by the SEC is contrary to our core values and clear policies, and if we identify such behaviour, we will take appropriate action.”

However, 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.

Further, this is not the first time Oracle’s India unit has been fined on similar grounds.

It is also recalled that 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.

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