Oracle employees in its Indian unit used an excessive discount scheme linked to a transaction with a transportation company owned by the Ministry of Railways, the United States Securities and Exchange Commission (SEC) said.
The United States Securities and Exchange Commission (SEC) has fined tech giant Oracle more than $23 million for violating the Foreign Corrupt Practices Act (FCPA). Oracle used slush funds to bribe officials in India, the United Arab Emirates and Turkey in exchange for business between 2016 and 2019, according to the SECOND.
“The creation of off-the-books slush funds inherently carries the risk that these funds will be used inappropriately, which is exactly what has happened here at Oracle’s subsidiaries in Turkey, the United Arab Emirates and India. This case highlights the critical need for effective internal accounting controls throughout a company’s operations,” said SEC FCPA Unit Chief Charles Cain.
Oracle agreed to pay $8 million in restitution and the remaining $15 million is the penalty out of the total $23 million, according to the SEC. Although he did not admit or deny any wrongdoing in agreeing to settle.
“The conduct described by the SEC is contrary to our core values and clear policies, and if we identify such behavior, we will take appropriate action,” said Oracle spokesman Michael Egbert. told the Reuters news agency.
Oracle employees in its Indian unit used an excessive discount scheme linked to a transaction with a transport company owned by the Ministry of Railways, according to the SEC. Employees offered a hefty 70% discount on software deals to ward off competitors, the market watchdog added.
The SECOND discovered that there was no competition as the Indian Ministry of Railways’ procurement website clearly required the use of Oracle products for the project. According to the SEC order, one of the employees involved in the transaction kept a spreadsheet showing that a buffer of $67,000 was available to potentially make payments to India’s state-owned enterprise (SOE) officials. .
“A total of approximately $330,000 was directed to a reputable entity to pay SOE officials and an additional $62,000 was directed to an entity controlled by the sales employees responsible for the transaction,” the order reads.
This is the second time Oracle has been accused by the SEC of bribing officials in India.
In 2012, Oracle’s India unit was found guilty of keeping unauthorized secondary funds with distributors from 2005 to 2007. Oracle had agreed to pay $2 million to settle SEC charges of breaching provisions of the FCPA.