SEC settles second FCPA enforcement action with multinational technology company

On September 27, 2022, the Securities and Exchange Commission announced that it reached an approximately $23 million settlement with multinational technology company Oracle Corporation to resolve allegations that the company violated the Foreign Corrupt Practices Act for conduct undertaken by agents and employees of its subsidiaries in Turkey, United Arab Emirates, and India.  According to the SEC's order, between 2014 and 2019, the subsidiaries used discounts and sham marketing payments to create and use off-book slush funds to bribe foreign officials.  The improper payments included paying for travel and accommodations for government officials’ spouses and children, side trips, and trips for which there were almost no business activities but were instead primarily leisure and tourist activities.  The SEC also penalized Oracle for using the slush funds to pay for accommodations for customers “to attend Oracle’s annual technology conference in violation of Oracle’s internal policies.”  

Without admitting or denying the SEC’s findings, Oracle agreed to cease and desist from committing further violations of the FCPA’s anti-bribery, books and records, and internal controls provisions.  Oracle also agreed to pay nearly $8 million in disgorgement and prejudgment interest and a $15 million civil money penalty.  The SEC credited Oracle’s cooperation with it, which included “self-report[ing] certain unrelated conduct,” sharing facts developed during Oracle’s internal investigations, voluntarily translating key documents, and facilitating interview requests.  The SEC also credited Oracle’s extensive remediation efforts, which included the creation of over 15 new positions in Oracle’s compliance, risk, and control functions; the implementation and expansion of transactional controls to improve its discount approval process and make its product discounting process more transparent; developing and implementing a compliance data analytics program; reducing the number of third parties engaged; enhancing the company’s proactive audit functions; improving compliance training and messaging; and terminating senior regional managers, employees, distributors, and resellers involved in the alleged misconduct.

The SEC previously entered into a $2 million settlement with Oracle in 2012 to resolve allegations that Oracle violated the books and records and internal accounting controls provisions of the FCPA.  Specifically, the SEC alleged that Oracle India Private Limited (“Oracle India”) utilized off-the-books funds between 2005 and 2007 to pay vendors that did not provide any services to Oracle.   Because these funds were not accurately recorded in Oracle India’s books and records, when those records were consolidated into Oracle’s financials, Oracle’s books and records became inaccurate.  In addition, the SEC found that Oracle failed to maintain a system of internal controls that would have “prevent[ed] its employees at Oracle India from creating and misusing” the slush funds.  

SEC Press Release | SEC Order | SEC Press Release (2012)

 
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