Oracle is said to have diverted millions of dollars and misused them to bribe decision-makers and officials in India, Turkey and the United Arab Emirates (UAE). This is the result of an investigation by the US capital market authority SEC (Security Exchange Commission). Oracle does not admit, but does not deny the allegations either. Rather, the company will pay $23 million to have the case dropped and accept a cease and desist order.
The SEC accepted the Texas company’s offer on Tuesday. The payment consists of a $7.1 million levy, $800,000 in interest and a $15 million penalty because the SEC finds a violation of the Foreign Corrupt Practices Act (SEC Notice 3-21158).
In 2012 it was even cheaper
In 2012, Oracle had to pay for violating the same law. At that time, too, there were black coffers at Oracle: the company had reported at the time that it had found 2.2 million dollars diverted from its Indian subsidiary. The money came in particular from public contracts, which Oracle had billed at greatly inflated prices. At that time, the SEC only complained that money in slush funds could be misused, but apparently had no evidence of this. Oracle got away with a $2 million settlement in 2012.
At the time, the company said it had controls that were among the best in the industry. And: “We will maintain a high standard of compliance and accountability for our companies around the world.” Again in India, and now in Turkey and the UAE, it hasn’t worked sufficiently – and hasn’t from the beginning. In Turkey, the slush funds for corrupt purposes are said to have existed from 2009 to 2019.
Tenders without competitive pressure
According to the SEC decision, Oracle – with the knowledge of the Turkey manager – invited officials from the Turkish Ministry of the Interior to a week-long vacation to California in May 2018 with the aim of winning a contract as part of the construction of the Turkish emergency call center. In theory, the trip was for a meeting with an Oracle manager in California, but that meeting only took about fifteen minutes. At the end of the month, Oracle actually received a large order. There was no competition: the Turkish ministry required all bidders to use specific Oracle products
Already in 2016/2017 officials of the Turkish social security system are said to have been bribed. Oracle products were also mandatory for their tender. According to the SEC, there have been slush funds in the UAE since 2014. There, too, travel for officials and customers was paid for and a manager of a state client was bribed. In India, in early 2019, Oracle paid a six-figure dollar amount to a middleman known for bribing decision-makers at a majority-owned railway company. And again, the tender required that the order be fulfilled with Oracle products.
Oracle has now laid off several employees and terminated contracts with several partner companies. The company also conducted an internal investigation and uncovered other wrongdoings, which it has reported to the SEC. What this is about is not known. Oracle again promises to improve internal controls, this time for which 15 additional positions are to be created at corporate headquarters.
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