Oracle to pay $2 m for violating US laws

Oracle has agreed to pay $2 million to settle Securities and Exchange Commission (SEC) accusations that the Indian subsidiary violated US laws designed to prevent bribery overseas.

The SEC in its complaint said the company failed to prevent Oracle India from secretly setting aside money that was finally used to make unauthorised payments to vendors in India.

The unauthorised funds that existed between 2005 and 2007 amounted to around $ 2.2 million, the SEC said.

According to the complaint, Oracle India in May 2006 secured a $3.9-million deal with the Ministry of Information Technology and Communications.

However, as instructed by Oracle India's then-sales director, only $2.1 million was sent to Oracle as transaction amount.

Other employees were then instructed by the distributors to park $ 1.7 million for ‘marketing development purposes’, the SEC said.

The distributors kept $1.51 million for services rendered.

“In 2007, Oracle discovered that a few employees of its Indian subsidiary apparently had directed distributors to maintain side funds in violation of Oracle business practices. Following a thorough investigation, the services of the employees involved were terminated,” Oracle India spokesperson said, responding to Business Line’s queries.

Oracle disclosed the matter to the government and has cooperated with the SEC in its investigation, culminating in today’s announcement of a $2-million settlement, the spokesperson said.

However, the company did not disclose the names of any employee. A sales manager linked to the plan resigned, the jobs of four employees were terminated and the company has put in place controls and training to prevent similar situations from occurring again, it said.

“We will continue to maintain a high standard of compliance and accountability for our business,” Oracle spokesperson Deborah Hellinger said.

>ronendrasingh.s@thehindu.co.in