Oracle to pay $2 million to settle SEC charges over shady India transactions

Software giant Oracle has agreed to make a payment of $2 million towards settlement of charges by US regulators that its Indian subsidiary violated foreign anti-bribery laws by secretly allocating money to make unauthorised payments to phoney vendors.

In a complaint filed with the federal court in San Francisco on Thursday, the US Securities and Exchange Commission (SEC) has alleged that between 2005 and 2007 Oracle India employees asked distributors to keep some funds off the books.

On more than a dozen occasions during the course of executing eight government contracts, certain Oracle India employees padded on "margins" to deals they transacted with distributors, it alleged.

The funds added up to $2.2 million and went towards making payments to third parties, a number of which turned out to be either non-existent entities or storefronts, according to the SEC.

For instance, as per SEC's complaint, Oracle India secured a $3.9 million deal with India's ministry of information technology and communications in May 2006 and in accordance with Oracle India's then sales director, only $2.1 million was sent to Oracle to record as revenue on the transaction, while the distributor retained $151,000 for services rendered.

The distributor was further asked by employees to park the remaining $1.7 million for "marketing development purposes".