Oracle pays $23 million to SEC to settle bribery charges

India, Turkey, UAE subsidiaries set up slush funds to bribe 'foreign officials' says watchdog

Oracle has paid $23 million to the US Securities and Exchange Commission to settle corruption charges that subsidiaries in Turkey, United Arab Emirates and India used “slush funds” to bribe foreign officials to win business.

The SEC said on Tuesday that Big Red violated provisions of the Foreign Corrupt Practices Act (FCPA) during a three-year period between 2016 and 2019.

The cash that was apparently surreptitiously set aside was also spent on paying for foreign officials to attend technology conferences, which breaks Oracle’s own internal policies and procedures. And the SEC said that in some instances, it found Oracle staff at the Turkish subsidiary had spent the funds on taking officials’ families with them on International conferences or side trips to California.

“The creation of off-books slush funds inherently gives rise to the risk those funds will be used improperly, which is exactly what happened here at Oracle’s Turkey, UAE, and India subsidiaries,” said Charles Cain, FCPA unit chief at the SEC.

“This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations,” he added.

Oracle, without admitting or denying the findings of the SEC’s investigation, has agreed to “cease and desist from committing violations” of the anti-bribery, books and records, and internal accounting controls of the FCPA, said the Commission.

As such, the software giant - which made $10.9 billion in operating profit during its fiscal 2022 on revenues of $42.4 billion - has agreed to pay a $15 million penalty and $8 million in disgorgement. Larry Ellison might be checking down the sofa for change to pay such a steep penalty.

A spokesperson at Oracle told The Register: “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.”

This is not the first time the SEC has accused Oracle of similar financial wrongdoing. Those with long memories may recollect that Oracle resolved charges in 2012 that related to the creation of side funds filled with millions of dollars by Oracle India. On that occasion the SEC said there was a risk these funds could be used for illicit purposes.

Certain employees of the subsidiary had structured sales with India’s government on more than a dozen occasions in such a way that let Oracle’s local distributors hold roughly $2.2 million of the funds in a slush fund. Payments were then directed to local vendors that didn’t provide any services to Oracle and fake invoices were raised.

Oracle was ordered to pay $2 million on that occasion to the SEC. Clearly some lessons aren’t learnt the first time round, here’s hoping the message gets through this time, or Big Red might be facing yet another mini fine and further embarrassment. ®