According to the SEC order, from at least 2014 through 2019, employees of Oracle subsidiaries in India, Turkey, and the United Arab Emirates (UAE) “used discount schemes and sham marketing reimbursement payments to finance slush funds held at Oracle’s channel partners in those markets.”
The SEC’s order further stated that employees of Oracle’s subsidiary in Turkey routinely used the slush funds to pay for the travel and accommodation expenses of foreign officials to attend technology conferences in Turkey and the United States. In some instances, employees of the Turkey subsidiary used these funds for the foreign officials’ families to accompany them on international conferences or take side trips to California, the SEC order stated.
“Oracle Turkey’s management, including the country leader, knew of and condoned the practice,” the SEC order stated. “Given how these schemes were implemented, Oracle lacks records regarding the full size and scope of how these off-book slush funds were used.”
Repeat Offender
This is the second time Oracle has been sanctioned by the SEC concerning creation of slush funds. In 2012, Oracle paid a $2 million penalty to resolve SEC charges for FCPA violations for failing to prevent Oracle India from secretly setting aside money off the company’s books that was eventually used to make unauthorized payments to phony vendors in India.
“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,” said Charles Cain, the SEC’s FCPA Unit Chief. “This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations.”
Without admitting or denying the SEC’s findings, Oracle agreed to cease and desist from committing violations of the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and to pay approximately $8 million in disgorgement and a $15 million penalty. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.