US financial regulator reveals $4,00,000 bribe in Oracle-Indian Railway firm deal

Hyderabad: In a development that exposes large scale corruption in state owned entities under the Indian Railways, the United States Securities and Exchange Commission (SEC) has revealed that that Oracle Corporation paid a bribe of more than US$400,000 to officials from a company owned by the Indian Ministry of Railways in 2019. The revelation came […]

Hyderabad: In a development that exposes large scale corruption in state owned entities under the Indian Railways, the United States Securities and Exchange Commission (SEC) has revealed that that Oracle Corporation paid a bribe of more than US$400,000 to officials from a company owned by the Indian Ministry of Railways in 2019.

The revelation came in the settlement negotiated by Oracle with the SEC for paying bribes of over US$23mn (million) to officials in three countries—India, Turkey and the United Arab Emirates (UAE).

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The Foreign Corrupt Practices Act makes it illegal for US companies to pay bribes abroad.

According to an SEC press release (Read the full press release here: https://www.sec.gov/news/press-release/2022-173), the SEC has announced settled charges requiring Oracle Corporation to pay more than $23 million to resolve charges that it violated provisions of the Foreign Corrupt Practices Act (FCPA) when subsidiaries in Turkey, the United Arab Emirates (UAE), and India created and used slush funds to bribe foreign officials in return for business between 2016 and 2019.

Further, according to the SEC order related to the incident, (Read the full order here: https://www.sec.gov/litigation/admin/2022/34-95913.pdf), under the head ‘Improper Conduct at Oracle India’, Oracle India sales employees in 2019 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, citing intense competition from other original equipment manufacturers, claimed the deal would be lost without a 70 per cent discount on the software component of the deal. Due to the size of the discount, Oracle required an employee based in France to approve the request. The Oracle designee provided approval for the discount without requiring the sales employee to provide further documentary support for the request,” it said.

The order says that ‘in fact, the Indian SOE’s publicly available procurement website indicated that Oracle India faced no competition because it had mandated the use of Oracle products for the project’.

“One of the sales employees involved in the transaction maintained a spreadsheet that indicated $67,000 was the “buffer” available to potentially make payments to a specific Indian SOE official. 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,” it added.

This is the second time that Oracle has been in such trouble, with the SEC previously sanctioning the firm 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 said.

“Without admitting or denying the SEC’s findings, Oracle has agreed to pay approximately US$8 million in disgorgement and a US$15 million penalty,” the SEC press release says.

Neither Oracle nor the Indian Railways have responded to attempts for a comment from different media publications over the last four days.