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Recidivist Oracle pays SEC $22.9 million to settle FCPA offenses

American technology giant Oracle Corporation agreed Tuesday to pay the SEC $22.9 million to resolve charges that it violated the Foreign Corrupt Practices Act in Turkey, India, and the United Arab Emirates through subsidiaries that created and used slush funds to bribe foreign officials in return for business. In August 2012, Oracle paid a $2 million civil penalty to the SEC to settle FCPA charges arising from a slush fund in India.

In Tuesday’s internal administrative order, the SEC charged the company with violating the FCPA’s anti-bribery, books and records, and internal accounting controls provisions.

Without admitting or denying the civil charges, Austin-based Oracle agreed to pay $7.9 million in disgorgement and pre-judgment interest and a civil penalty of $15 million.

From 2009 to 2019, Oracle Turkey used both excessive discounts and sham marketing reimbursement payments to create off-book slush funds, the SEC said.

“Oracle Turkey employees routinely used the slush funds to pay for the travel and accommodation expenses of end-user customers, including foreign officials, to attend annual technology conferences in Turkey and the United States, including Oracle’s own annual technology conference.”

The slush funds were sometimes used to pay travel and accommodation expenses of foreign officials’ spouses and children, as well as for side trips to Los Angeles and Napa Valley, according to the SEC’s administrative order.

Oracle Turkey’s senior management “knew of and condoned the practice.”

In the UAE from at least 2014 to 2019, certain sales employees “used both excessive discounts and marketing reimbursement payments to maintain slush funds . . . to pay for the travel and accommodation expenses of end customers, including foreign officials, to attend Oracle’s annual technology conference in violation of Oracle’s internal policies,” the SEC said.

Oracle sales employees in India in 2019 used an “excessive discount scheme” in a transaction with a transportation company owned mostly by the Indian Ministry of Railways. The 70 percent discount was approved by an Oracle employee based in France. The SEC said Oracle funneled about $330,000 “to an entity with a reputation for paying” officials of Indian state-owned enterprises.

In a statement emailed to the FCPA Blog, Oracle spokesperson Michael Egbert said, “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.”

The SEC charged Oracle in the 2012 enforcement action with violating the FCPA’s books and records and internal controls provisions. The agency said India employees created a slush fund and used it to pay sham local vendors, and documented some of the payments with fake invoices.

On Tuesday, the SEC said it took into account Oracle’ s self-reporting (including self-reporting unrelated conduct) and other remedial efforts.

Oracle’s remediation included terminating senior regional managers, terminating distributors and resellers, creating over 15 new risk and compliance positions and teams globally, and implementing a compliance data analytics program.

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