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Indian Railways may consider listing Oracle Corp. blacklisted if an internal investigation into allegations that the Indian arm of the database software maker paid bribes to railway officials in 2019 is found, two officials with knowledge of the development said.
The terms of reference for the railroad’s internal investigation seek to establish the facts that led the U.S. Securities and Exchange Commission (SEC) to fine Oracle $23 million in a September 27 order for violating the Foreign Corrupt Practices Act.
Oracle allegedly paid bribes to an official of the transport company, majority owned by the Ministry of Railways. The ministry will also look into whether such payments have previously occurred in contracts from state-owned enterprises (SoEs).
One of the officials cited above said that the railway ministry has approached the SEC and Oracle seeking details of allegations of bribery and involvement of the railway entity and officials.
Once all the details are provided and the railway investigation identifies specific persons and the involvement of any of its entities in the bribery scandal, charges will be laid against its officials and Oracle India may face a ban from railway contracts and subsequently also be blacklisted from participation in other government contracts. contracts in India for a certain period.
The SEC order stated that Oracle allegedly created a slush fund to bribe foreign officials in the United Arab Emirates, India and Turkey. It said Oracle funneled $400,000 to an Indian company that had a reputation for paying officials of state-owned enterprises. The order stated that Oracle’s sales staff in India kept a reserve of $67,000 to potentially make payments in 2019 to a specific Indian official for the railway contract.
The SEC order also stated that in January 2019, an Oracle India sales official demanded a 70% discount on the software component of the deal from an authorized French official, even though Oracle India faced no competition in the deal as the railway company had mandated the use of Oracle products for the project.
This is not the first time Oracle has been named in connection with the creation of slush funds. In 2012, Oracle settled charges related to the creation of millions of dollars in slush funds by Oracle India, the report said.
“Oracle is fully committed to conducting business with integrity. The behavior outlined by the SEC is inconsistent with our core values and clear policies, and we will take appropriate action if we discover such behavior. If we receive requests from the Ministry of Railways regarding this matter, we will respond accordingly,” an Oracle spokesperson said.
A query sent to the Ministry of Railways remained unanswered till press time.
But the officials said on condition of anonymity that the SEC’s findings are very specific and serious in nature, and if the railroad investigation follows a trail of illegal funds and rewards received by some officials, it would certainly bar Oracle from railroad contracts.
This may also result in the MNC being blacklisted from participating in other government contracts under government rules. But the decision in this regard will follow due process and will be taken at the highest level, officials said.
Railroad officials are conducting a current internal investigation and no other law enforcement agencies are involved.
People privy to the development said other agencies may be involved at a later stage, depending on the facts gathered in the railways’ investigation.
While the SEC order is specific about the payments to the railroad-owned transportation company, the national carrier has yet to identify an entity that may have been involved in the bribery scandal.
The Ministry of Railways has under its administrative control 12 public sector undertakings.