SEC FINES ORACLE $23 MILLION TO RESOLVE SLUSH FUNDS FCPA CLAIMS
November 15, 2022
On September 27, 2022, the U.S. Securities and Exchange Commission (“SEC”) announced via press release that it has reached a settlement with Oracle Corporation (“Oracle”) under which Oracle agreed to pay $23 million in fines to resolve claims that its subsidiaries in Turkey, India, and the United Arab Emirates (“UAE”) allegedly created and used slush funds to bribe foreign officials in violation of the U.S. Foreign Corrupt Practices Act.
SEC said that the alleged slush fund schemes took place between 2009 and 2019 during which time Oracle used direct and indirect sales models. While SEC said that it believed that Oracle did use the indirect sales model for some legitimate business purposes, it alleged that Oracle also used the indirect sales model to make transactions through value-added distributors and value-added resellers ultimately leading to the creation of improper slush funds. SEC also alleged that Oracle subsidiaries had been using company discount processes to create the slush funds. For example, for over a decade Oracle Turkey allegedly used “excessive discounts” and “sham marketing reimbursements” to create slush funds and then used the slush funds to pay for travel and accommodation expenses for customers and foreign officials to attend events in the U.S. and Turkey. SEC also noted that an Oracle Turkey sales manager allegedly bribed Turkish officials with a week-long paid trip to California in May 2018 while Oracle Turkey was bidding on a contract with Turkey’s Ministry of Interior and that the trip was allegedly likely to have been paid for with slush fund money. Coincidentally, Oracle Turkey ended up winning a large order project awarded by the Turkish Ministry in May 2018. SEC also alleged that similar schemes were conducted by Oracle employees in India and the UAE in relation to a deal with the Indian Ministry of Railways and the use of alleged slush fund money to pay bribes to UAE government officials in exchange for business contracts awarded in 2018 and 2019.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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