Oracle’s employees at its India unit used an excessive rebate scheme related to a transaction with a transport company owned by the railway ministry, the US Securities and Exchange Commission (SEC) said.
The US Securities and Exchange Commission (SEC) has imposed a fine of more than 23 million dollars on the technology giant Oracle for violations of the Foreign Corrupt Practices Act (FCPA). Oracle used slush funds to bribe officials in India, the United Arab Emirates and Turkey in return for business between 201[ads1]6 and 2019, according to the SEC.
“The creation of off-book slush funds inherently presents the risk that these funds will be misused, which is exactly what happened here at Oracle’s subsidiaries in Turkey, the UAE and India. This case highlights the critical need for effective internal accounting controls throughout the company’s operations, said Charles Cain, the SEC’s FCPA unit chief.
Oracle has agreed to pay $8 million in disgorgement and the remaining $15 million is the penalty of the total $23 million, according to the SEC. Although it did not admit or deny wrongdoing in agreeing to settle.
“The conduct outlined by the SEC is contrary to our core values and clear policies, and if we identify such conduct, we will take appropriate action,” Oracle spokesman Michael Egbert told Reuters news agency.
Oracle employees at its India unit used an excessive rebate scheme related to a transaction with a transport company owned by the railway ministry, according to the SEC. The employees offered a huge discount of 70% on software deals to keep competitors away, the market watchdog added.
The SEC discovered that there was no competition as the procurement website of the Indian Railway Ministry clearly mandated the use of Oracle products for the project. According to the SEC order, one of the employees involved in the transaction maintained a spreadsheet indicating that a $67,000 buffer was available to potentially make payments to Indian officials of the state-owned enterprise (SOE).
“A total of about $330,000 was transferred to an entity with a reputation for paying SOE officials, and a further $62,000 was paid to an entity controlled by sales staff responsible for the transaction,” the order said.
This is the second time Oracle has been charged by the SEC with bribing officials in India.
In 2012, Oracle’s India unit was found guilty of keeping unauthorized collateral funds with distributors from 2005 to 2007. Oracle had agreed to pay $2 million to settle the SEC’s allegations of violating FCPA provisions.