Railway Ministry begins investigation against Oracle following SEC order

The Railway Ministry has begun investigating the bribery allegations against Oracle raised by the US Securities and Exchange Commission (SEC) order issued last month.

According to the SEC order, Oracle has been charged with bribing officials of a SOE under the administrative control of the Indian Railways.

A Railway Ministry official said that no timeline or state-owned enterprise (SOE) has been identified as being the primary target of this investigation till now.

Sources told ET that the Ministry has also reached out to Oracle and the SEC, asking them to reveal the name of the SOE and officials who took the bribes.

This allegation is the outcome of a SEC investigation that led to fines of over $ 23 million on charges that Oracle violated provisions of the Foreign Corrupt Practices Act (FCPA) as its subsidiaries in India, Turkey and the United Arab Emirates (UAE).

According to the SEC order, “Oracle India sales employees used an excessive discount scheme in connection with a transaction with a transportation company, a majority of which was owned by the Indian Ministry of Railways (“Indian SOE”). In January 2019, the sales employees working on the deal claimed the deal would be lost without a 70% discount on the software component of the deal, citing intense competition from other original equipment manufacturers”

The report said Oracle needed a France-based employee to approve the request due to the size of the discount. The employee approved the discount without asking for further documentary support. The Indian SOE’s publicly available procurement website indicated Oracle India had no competition as it had mandated the use of Oracle products for the project.

One of the sales employees involved in the transaction maintained a spreadsheet that indicated $67,000 was the “buffer” available to potentially make payments to a specific Indian SOE official. A total of approximately $330,000 was funneled to an entity with a reputation for paying SOE officials and another $62,000 was paid to one controlled by the sales employees involved in the transaction.