Oracle may be banned from railway contracts if bribery charge is proved

Indian Railways may consider black listing multinational information technology firm Oracle and banning it from participating in all its future contracts, if an internal enquiry instituted by it into allegations of Oracle’s Indian arm paying bribes to officials of a railways public sector undertaking (PSU) in 2019 is established.

According to two official’s privy to the development, the terms of reference of the internal enquiry by Railways is to ascertain facts on the basis of SEC order on bribes being paid by Oracle India to a specific official of a transportation company, a majority of which was owned by the Indian Ministry of Railways. It will also look whether such payments were made earlier too bag contracts from state owned enterprises.

One of the officials quoted above also said that Ministry of Railways has also reached out to both SEC and Oracle Corporation to share more details about the bribery trail and involvement of a specific railway entity and officials.

Once all details come in and Railways enquiry pinpoints to specific individuals and involvement of any of its entity in the bribery scandal, charges would be framed against its own officials as well as Oracle that may face ban participating in Railway contracts and resultantly also get blacklisted from participation in other government contracts in India for a specific period of time.

In a September 27 order, the US Securities and Exchange Commission (SEC) fined Oracle to the tune of $23 million for creating slush funds to bribe foreign officials in the United Arab Emirates, India, and Turkey, in violation of the Foreign Corrupt Practices Act (FCPA).

The cease-and-desist order based on an enquiry presented to SEC, also said Oracle channelled funds to the tune $4,00,000 into an Indian outfit that had reputation of paying officials of state-owned enterprises (SoE) in the transport segment owned by ministry of railways. In fact, the order pinpointed Oracle sales employees in India kept a buffer of $ 67,000 to potentially make payments to a specific Indian SoE official in 2019 to bag a railway contract.

Also, the SEC order has said that a sales employee of Oracle India in January 2019 sought 70 per cent discount on software component of a deal from an authorised French official even though Oracle India faced no competition in the deal because Railway enterprise had mandated the use of Oracle products for the project.

This is not the first time that Oracle name has surfaced under FCPA. A press release issued by US SEC said that the Commission previously sanctioned Oracle in connection with the creation of slush funds. In 2012, Oracle resolved charges relating to the creation of millions of dollars of side funds by Oracle India, which created the risk that those funds could be used for illicit purposes, the release said.

“Oracle is fully committed to doing business with integrity. The conduct outlined by the SEC is contrary to our core values and clear policies, and if we identify such behaviour, we will take appropriate action. If we receive requests from the Ministry of Railways related to this matter, we will respond accordingly,” said an Oracle spokesperson on SEC order and Railways enquiry over bribery allegations against the company.

Query send to ministry of railways remained unanswered till the time of going to press.

But officials on condition of anonymity said that SEC findings were very specific and serious in nature and if Railway enquiry tracks the trail of illicit funds and gratifications received by certain officials, it would certainly bar Oracle from Railway contracts that may also result in the multinational firm getting blacklisted from participation in other government contracts. But a decision in this regard would follow due process and taken at the highest level, the officials said.

The current internal investigation is being carried by officials and no other enforcement agencies are involved. People privy to the development said, that other agencies may be involved at a later stage depending on the facts gathered by the Railways enquiry.

While SEC order is specific regarding payments to a transport company owned by the Railways, the national transporter is yet to identify the entity that may have been involved in the bribery scandal. The ministry of railways has 12 public sector undertakings under its administrative control.