NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

SCHOOL OF BUSINESS MANAGEMENT

Project Report on

“Oracle fined for Bribery in India, 2022”

Submitted in partial fulfilment of the requirements for Ethical Issues in Management

For the Academic year 2023-24 on 14-07-2023
E-052 Apoorv Manchanda 80512301008

By GROUP 8

Under the Guidance of

Dr. Srinivas Chunduru
NMIMS, Mumbai

Introduction

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In the infamous Oracle bribery case of 2022, Oracle was fined roughly $23 million by the
United States SEC - Securities and Exchange Commission for breaching and not following
the Foreign Corrupt Practices Act (FCPA) between 2016 and 2019. The ethical implications
of this case are the focus of this paper. Subsidiaries in the UAE, India, and Turkey established
and utilised slush funds to bribe authorities in exchange for work.

Context and facts of the issue at hand: Bribery

Bribery is the act of exchanging anything of value for power or for carrying out immoral or
criminal conduct. Bribery is considered unethical because it involves the exchange of
something of value for an unfair advantage. It can also be seen as a form of corruption
because it undervalues the integrity of the system and can lead to a lack of faith in
institutions¹.
Bribery can take many different forms, such as monetary bribes, presents, favours, or other
advantages. Any industry and any level of an organisation may experience it. Bribery can
have serious consequences for both the bribe giver and the bribe receiver. It can lead to legal
action, fines, and even imprisonment¹.
Bribery is considered unethical because it violates basic principles of fairness and justice. It
gives an unfair advantage to those who are willing to pay for it while disadvantaging those
who are not. It also undermines the integrity of the system by allowing people to bypass rules
and regulations that are in place to protect the public interest³.
Oracle’s case in specific, highlighted the fact that the company itself has a history of Bribery
cases. In order to resolve SEC charges that Oracle had broken the FCPA's internal accounting
controls and books-and-records requirements by failing to stop Oracle India from retaining
illegal side money at distributors from 2005 to 2007, Oracle agreed to pay a $2 million fine in
2012.
The team involved as per the contract said in January 2019 that without a 70% decrease in the
agreement's software component, the offer would fail due to a fierce fight from other original
equipment manufacturers. The order said that Oracle needed a member present in France to
authorise the ask because of the extent of the price reduction. IT went on to say that the
Oracle designee approved the discount request without needing the salesperson to provide
any further documents.
According to the ruling, Oracle underlining in Turkey and the UAE too used these funds as
currency for officials to sit for technical conferences, which is against the rules and
procedures set by Oracle. The order stated that occasionally, employees of the Turkey
subsidiary used this money to cover travel expenses for the officials' families to visit
California or to accompany them on side trips to international conferences.
Oracle was previously penalised by the SEC for the establishment of slush funds. A case
against Oracle involving the formation of side funds worth millions of dollars by Oracle
India, which raised the possibility that the monies would be utilised for illegal activities, was
settled in 2012.

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Charles Cain asserts that "Off-book fund formation always increases the chance that monies
would be misused, which is exactly what occurred here at Oracle's subsidiaries." This
incident highlights how important it is for a company to maintain effective accounting
controls across all facets of the business.
Without admitting or opposing the SEC's charges, Oracle paid a $15 million fine, forfeited $8
million in profits, and stop and abstain from breaking the FCPA's anti-bribery, records and
books, and internal controls standards. An internal inquiry into claims that Oracle paid around
$400,000 in bribery to its personnel had been opened by the Indian Ministry of Railways.
The investigation was launched in response to the US Securities and Exchange Commission's
(SEC) admission that Oracle had bought Indian Railway officials with "slush funds" in 2019.
When questioned about the investigation into the bribery scandal, a representative for the
Ministry of Railways responded, "Yes, Indian Railways has ordered an internal inquiry.
The SEC order that describes the corrupt practices and the punishment was made public on
September 27. It states that " 2019 saw the use of an excessive discount programme by
Oracle India sales staff in conjunction with a deal with a transport business, which was
mostly controlled by the Indian Ministry of Railways."
Sam Martin and Laura Bennett of the SEC performed the inquiry under David Reece's
supervision. The SEC's assistance is applauded by the Securities and Exchange Board of the
three countries.

Critical Perspective: Where did it go wrong?

Bribery is wrongdoing that damages the integrity of the system and may make people lose
faith in organisations. It violates basic principles of fairness and justice by giving an unfair
advantage to those who are willing to pay for it while disadvantaging those who are not.
Bribery may have damaging effects on the victim and society at large. It may lead to legal
action, penalties, and perhaps incarceration. Companies must have a management strategy in
place to keep an eye on and stop any unethical behaviour.
Bribery can also lead to a loss of reputation and trust among customers and stakeholders. It
can also lead to legal action and fines, which can be costly for the company. Bribery can also
create an unfair advantage for the company over its competitors, which can lead to an unlevel
playing field in the market. This can ultimately harm the economy as a whole.
In addition, bribery can create a culture of corruption within the company. This can lead to
other unethical practices such as fraud and embezzlement. Additionally, it may result in a
hostile workplace that hinders creativity and productivity. Companies should have a zero-
tolerance policy when it comes to bribery. They should have clear guidelines and procedures
in place to prevent bribery from occurring. This includes training employees on what
constitutes bribery and how to report it if they suspect it is occurring.

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Having read this news when I was working in the organization, the first instinctive thought I
had was, “Am I even in the right organization? Am I even doing the right thing? Do I even
belong here? Should I just quit? Where does the right v/s wrong debate end?” These are just
the questions I did not have an answer to, and as a fresher straight out of college, with next to
no experience, I went into an introspective zone.
I went out seeking clarity on what my stance should be, should I stay and understand the
company’s point of view, or should I leave and head for a better company where my values
align and I don’t feel unhomely. Taking this dilemma with me, I went out for answers, be my
friends, family or colleagues and eventually senior management, I did find my answers
sooner than later, we eventually had a town hall, where the entire Indian senior management
addressed the audience, realised, and admitted the mistake. What happened, who was
responsible, where were the lapses, and how did the company address them?

Without admitting or opposing the SEC's claims, Oracle paid the fines, which in my opinion
was the right move, but a public statement clarifying/apologizing for the actions would have
made the situation better.
Source:
(1) Bribery and Its Ethical Implications for Aid Workers in the ... - Springer.
https://link.springer.com/article/10.1007/s11948-016-9750-9.
(2) Corruption and Bribery | The Oxford Handbook of Business Ethics ....
https://academic.oup.com/edited-volume/28237/chapter/213327302.
(3) The Ethics of Bribery: Theoretical and Empirical Studies - Springer.
https://link.springer.com/book/10.1007/978-3-031-17707-1.