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Tech giant Oracle will pay about $23 million to resolve charges of violating the Foreign Corrupt Practices Act (FCPA). The firm’s India, Turkey and UAE units used slush funds — a reserve of money used for illicit purposes — to bribe foreign officials in return for business between 2016 and 2019 the US Securities and Exchange Commission (SEC) said on Tuesday.
The SEC order said that in 2019 Oracle India sales employees allegedly used an “excessive discount scheme” in connection with a transportation company, whose majority owner is the Ministry of Railways. The employees cited competition from other original equipment manufacturers and allegedly claimed the deal would be lost without a 70 per cent discount on the software component of the deal.
Further, Oracle required an employee based in France to approve the request, as the discount was huge. The discount approval was allegedly provided without getting documentary support. As the discount was provided to a state-owned enterprise (SOE), its procurement website indicated that “Oracle India faced no competition because it had mandated the use of Oracle products for the project,” the SEC order said.
One of the employees had maintained a spreadsheet that indicated $67,000 was the “buffer” available to potentially make payments to a specific Indian SOE official, according to the SEC order.
“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 an entity controlled by the sales employees responsible for the transaction,” the order further said.
Oracle has neither admitted nor denied the SEC’s findings. It has “agreed to cease and desist from committing violations of the anti-bribery, books and records, and internal accounting controls provisions of the FCPA,” according to the SEC. The firm has agreed to pay approximately $8 million in disgorgement and a $15 million penalty.
Commenting on the development, Oracle spokesperson Michael Egbert 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.”
The SEC previously sanctioned Oracle in connection with the creation of slush funds. In 2012, Oracle resolved charges relating to the creation of millions of dollars of side funds by Oracle India, which created the risk that those funds could be used for illicit purposes, the SEC release said.
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