On September 27, the U.S. Securities and Exchange Commission (SEC) announced that Oracle Corporation agreed to pay $23 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA). Oracle allegedly used slush funds to bribe foreign officials in Turkey, the United Arab Emirates, and India.
The FCPA is the United States’ main anti-corruption law. It prohibits companies from paying bribes to foreign government officials in order to obtain business advantages.
According to the SEC order, “[f]rom at least 2014 through 2019, employees of Oracle subsidiaries based in India, Turkey, and the United Arab Emirates used discount schemes and sham marketing reimbursement payments to finance slush funds held at Oracle’s channel partners in those markets. The slush funds were used both to (i) bribe foreign officials, and/or (ii) provide other benefits such as paying for foreign officials to attend technology conferences around the world in violation of Oracle’s internal policies.”
“The creation of off-book 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, the SEC’s FCPA Unit Chief. “This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations.”
This is not the first time Oracle has been sanctioned by the SEC for FCPA violations related to slush funds. In 2012, Oracle agreed to pay the SEC $2 million to settle charges that it failed to prevent a subsidiary in India from secretly setting aside money off the company’s books to make unauthorized payments.
In 2010, the Dodd-Frank Act (DFA), which established the SEC Whistleblower Program, added whistleblower provisions to the FCPA. Individuals can disclose information relevant to potential FCPA violations to either the SEC or the Commodity Futures Trading Commission (CFTC).
Through the SEC and CFTC Whistleblower Programs, qualified whistleblowers, individuals who voluntarily provide the SEC or CFTC with original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government.
In May 2021, the SEC awarded $28 million to a whistleblower who provided information that led to a successful SEC enforcement action and an enforcement action by another agency. In keeping with confidentiality protections, the SEC did not reveal the case for which this award was issued. However, the lawyers who represented the whistleblower announced that the award is in connection to FCPA charges against a U.S. subsidiary of Japanese electronics company Panasonic.
Read:
SEC Charges Oracle a Second Time for Violations of the Foreign Corrupt Practices Act
