Has Oracle used slush funds for bribes in India?

The bribing saga

- Oracle to shell out $23-mn penalty

- Its executives offered 70% discount for an Indian Railway deal

- Govt Officials attended tech meets overseas with families

Bengaluru: Has software major Oracle used slush funds for bribing officials to get business deals in India? It looks like so.

In an incidence of bribery in the technology world, global tech major Oracle will pay $23 million towards settlement charges for violating the Foreign Corrupt Practices Act (FCPA), a filing by the US Securities and Exchange Commission (SEC) said.

The tech major has been accused of using slush funds to bribe officials for winning business deals in India, Turkey and the United Arab Emirates (UAE) during 2016-2019 period. Out of the total settlement amount, Oracle will pay $8 million in disgorgement and the rest $15 million towards the penalty.

"Oracle India sales employees used an excessive discount scheme in connection with a transaction with a transportation company, a majority of which was owned by the Indian Ministry of Railways (Indian SOE). In January 2019, the sales employees working on the deal claimed the deal would be lost without a 70 per cent discount on the software component of the deal, citing intense competition from other original equipment manufacturers," the SEC order said.

According to the order, Oracle's staffers used discount schemes and marketing reimbursement payments to bribe officials by facilitating attendance of tech conferences around the world, which was in contravention to company's policies.

Officials in India, Turkey and the UAE were given undue favour by using these slush funds in which foreign officials attended tech conferences along with their families or take side trips.

This is the second instance of bribery involving Oracle's India unit. Earlier in 2012, Oracle had resolved charges related to creating a side fund of millions by the India unit, "which created the risk that those funds could be used for illicit purposes."

The company had paid $2 million as fine to settle SEC charges during that period concerning the creation of millions of dollars of unauthorised side funds by its India unit from 2005 to 2007.

Without admitting or denying the SEC's findings, Oracle agreed to cease and desist from committing violations of anti-bribery, books and records, and internal accounting controls provisions of the FCPA.

"The conduct outlined 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 spokesperson Michael Egbert.

Earlier, many global technology majors have faced such charges in India and other developing nations over providing undue favours to public officials for winning deals. Given the culture of corruption in many developing nations, negotiating the business environment has always proved to be tough for MNCs.

Oracle India sales employees used an excessive discount scheme in connection with a transaction with a transportation company, a majority of which was owned by the Indian Ministry of Railways

- US Securities and Exchange Commission