Oracle’s $23M FCPA Settlement Highlights ‘Critical Need’ for Strong Compliance Policies

Oracle Corp. has agreed to strengthen its global compliance, risk, and control practices and pay more than $23 million to settle a foreign bribery case with the U.S. Securities and Exchange Commission (SEC). 

The settlement announced Tuesday follows the retirement of longtime Oracle legal chief Dorian Daley, who told the company in late June that she planned to step down in August, according to an SEC filing. The 8-K noted that Daley would “assist in the transition of her duties until her retirement becomes effective.”

Daley is still listed as Oracle’s top lawyer on the Austin, Texas–based company’s website. Oracle representatives did not respond to questions about Daley’s status or the firm’s general counsel succession plan. 

The SEC alleged that employees at Oracle’s subsidiaries in Turkey, the United Arab Emirates, and India “used discount schemes and sham marketing reimbursement payments” to create slush funds to bribe and schmooze foreign officials from 2014 through 2019. 

“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,” stated Oracle spokesman Michael Egbert. He did not provide further comment. 

According to the SEC, Oracle employees would request discounts for Oracle products to purportedly undercut competition and secure deals. However, the discounts were actually used for bribes and to entertain foreign officials and their families by covering their travel and accommodation costs, including trips to Los Angeles and Napa Valley. 

The SEC’s order notes that “Oracle exercised control over its subsidiaries” and its “legal, audit, and compliance functions were centrally coordinated from its U.S. headquarters within the United States and implemented on a regional basis.”

But the SEC found that Oracle’s policies did not require employees to support discount requests with documentation, and the company repeatedly approved such requests without asking for any evidence to justify the discounts. 

“Given how these schemes were implemented, Oracle lacks records regarding the full size and scope of how these off-book slush funds were used,” the SEC noted. 

Oracle, which did not admit or deny the SEC’s findings, agreed to pay a $15 million penalty and about $8 million in disgorgement. The company also vowed to beef up its global compliance, risk, and control functions through the creation of more than 15 new positions, a compliance data analytics program, and improved anti-corruption training, among other things. 

The settlement comes after the SEC sanctioned Oracle in 2012, when the agency alleged that the company’s India-based subsidiary had violated the Foreign Corrupt Practices Act (FCPA) by creating slush funds holding millions of dollars. 

“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,” stated Charles Cain, chief of the SEC’s FCPA Unit. 

“This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations,” he added. 

From: Corporate Counsel