On August 16, 2012, the Securities and Exchange Commission filed a Complaint against Oracle Corporation for alleged FCPA violations stemming from actions by the software giant’s Indian subsidiary, and Oracle has agreed to pay $2 million to settle the matter.
According to the SEC’s Complaint (which can be found here), from 2005 to 2007, certain employees of Oracle’s Indian subsidiary, Oracle India Private Limited (“Oracle India”), secretly “parked” a portion of the proceeds from certain sales to the Indian government and put the money to unauthorized use, creating the potential for bribery or embezzlement. More than a dozen transactions were structured in this manner so that a total of around $2.2 million was held by Oracle’s distributors and kept off Oracle India’s corporate books. The Oracle India employees would then direct its distributors to disburse payments out of the unauthorized side funds to purported local “vendors,” several of which were merely storefronts that did not provide any services.
The SEC’s Complaint alleged that, through the actions described above, Oracle violated the “books and records” provisions of the FCPA. Specifically, the Complaint charged Oracle with:
- failing to make and keep books, records and accounts that, in reasonable detail, accurately and fairly reflected its transactions and dispositions of its assets; and
- failing to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions were executed in accordance with management’s general or specific authorization, and (ii) transactions were recorded as necessary to permit the preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for its assets.
According to the SEC’s press release (which can be found here), Oracle, without admitting or denying the SEC’s allegations, has consented to the entry of a final judgment ordering the company to pay a $2 million penalty and permanently enjoining it from future violations of these provisions. The SEC noted that the settlement took into account Oracle’s voluntary disclosure of the conduct in India, the company’s cooperation with the SEC’s investigation, and the remedial measures taken by the company, including Oracle’s firing of the employees involved in the misconduct and the significant enhancements made by the company to its FCPA compliance program.