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

Tech major Oracle has been fined $23 million for violating the Foreign Corrupt Practices Act (FCPA) by the US Securities and Exchange Commission (SEC). The company reportedly created ‘slush funds’ to bribe officials in return for business between 2016 and 2019 in countries such as India, Turkey and United Arab Emirates (UAE). 

A slush fund is a sum of money that is set aside as a reserve and is mostly used for illicit purposes.

The SEC has said that 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 employees working on the deal, said,  the company face stiff competition from other original equipment manufacturers (OEMs) and hence the deal would be lost if a 70% discount was not provided on the software component of the deal, according to a report by Moneycontrol.com. However, the report also said, “No documentary support was given for this request to be approved”. Nonetheless, the procurement website “indicated that Oracle India faced no competition because it had mandated the use of Oracle products for the project”, as per the report.

On the recent case, the SEC order further said that the company’s employees (also in Turkey and the UAE) used discount schemes and sham marketing reimbursement payments to finance slush funds. Similarly, the company’s subsidiaries used the slush funds to pay for foreign officials to attend tech conferences globally and in some cases, some of these funds were also used for officials’ families to either accompany them or to take side trips.

Oracle has not commented on the SEC’s findings, but the SEC statement said, of the total amount Oracle will pay to settle the charges, $8 million is in disgorgement and the rest $15 million is the penalty

This is the second time Oracle has faced such a charge in less than a decade, with the previous instance also including the company’s India unit. In 2012, it had resolved charges that pertained to creating a side fund of millions by the India unit.

Corruption and bribery charges are not uncommon in the world of business technology. As per reports, companies such as Microsoft, Amazon, Google, and several others come under the radar of the US Justice department and SEC over allegations of corruption and bribery.

In November 2020, Apple's head of global security Thomas Moyer has been charged with bribery. He was accused of offering bribes in the form of iPads worth $70,000 in order to obtain concealed firearms licenses.

The same year, Goldman Sachs Group, a global financial institution headquartered in New York, confessed to conspiring to violate the FCPA in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for them, and ended up paying $2.9 billion as penalty.

US-based Cognizant Technology Solutions has agreed to pay $25 million to settle charges towards violation of FCPA, as directed by SEC in 2019 and more recently, in 2021, a federal jury convicted Michael Kail, the former Vice President of IT Operations at Netflix, of wire fraud, mail fraud, and money laundering,