Oracle fined $2 mn for off-books payments in India

August 16, 2012
Software and systems giant Oracle was fined $2 million Thursday to resolve charges that its India subsidiary kept a multi-million dollar off-books slush fund.

Software and systems giant Oracle was fined $2 million Thursday to resolve charges that its India subsidiary kept a multi-million dollar off-books slush fund.

The said it had filed charges in San Francisco District Court accusing Oracle of violating the US Foreign Corrupt Practices Act by not preventing the subsidiary from setting up the $2.2 million fund.

The money, which came out of the from sales to agencies over 2005-2007, "was eventually used to make unauthorized payments to phony vendors in India", the SEC said in a statement.

The SEC did not allege that bribery had taken place, but suggested it was the possible purpose for payments to these ostensible vendors.

"In fact, none of these storefront-only third parties provided any services or were included on Oracle's approved vendor list," it said.

"The third-party payments created the risk that the funds could be used for illicit purposes such as or embezzlement."

Oracle neither admitted nor denied the allegations, but the SEC said it voluntarily disclosed the problem, had cooperated with the investigation and had fired employees involved in the misconduct.

But the company was fined for poor internal controls and poor supervision of is India subsidiary.

"Through its subsidiary's use of secret cash cushions, Oracle exposed itself to the risk that these hidden funds would be put to illegal use," said SEC San Francisco official Marc Fagel.

"It is important for US companies to proactively establish policies and procedures to minimize the potential for payments to foreign officials or other unauthorized uses of company funds."

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not rated yet Aug 16, 2012
In India, it is an old phrase used by Indian police when confronting minor infractors.....'how about making Ghandi smile twice?!' This ia an characteristically Indian way of using Mahatma's image on banknotes in a not so subtle demand for a bribe. That is the WAY business gets DONE in many countries, especially in parts of Asia. If WE do not DO it, someone ELSE will! So we get prosecuted, promise to be good little girls, and then do it on the sly. To not do it is to make sure EVERYONE loses there jobs and ALL the investor's money. Call it fudiciary responsibility! Truth sux does'nt it!?
4 / 5 (1) Aug 17, 2012
Fining companies are the only way that anything is going to change. Although 2 million seems like a slap on the wrist in my opinion. If we just let it go on no one will stop it, but maybe if we keep fining companies, and raising the standards others will follow suit.

India is at a crucial time in their development, so we must do something about it now, or they will end up with something that looks like their power grid: ugly, messy, but it works, sometimes, for most of the country, if you aren't being blacked-out at the time.

Besides outsourcing is the reason there are no jobs in the US, so frankly if some Indians loose their job and the jobs come back to the US I would kinda be happy, as I am in direct competition with them(IT). Of course it will probably just go to another Asian company, but I can dream, can't I?
not rated yet Aug 17, 2012
True Ox, but fining all bribing companies in all the world will not be allowed, as many nations actually promote bribery and even finance their own companies that do it. In this background, and among criminal corporate outlaws and scofflaws that are immune to US law, you would sentence American companies to total and permanent failure. In an era of 'free trade', those crooked companies will come here to this country and do the same bribery too, Fined, they will consider that a cost of doing business and not change a whit..and bribe some more. Were we to try to punish foreign scofflaws more, the host countries of these croodks would fine other ways to punish US. So we either be crooks or be damned to bankruptcy.

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