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Ethics A1.docx Apoorv Manchanda

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1306 Words 6823 Characters

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3 Pages 18.3KB

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Jul 14, 2023 4:47 PM GMT+5:30 Jul 14, 2023 4:48 PM GMT+5:30

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Summary
Title: Oracle fined for Bribery in India, 2022

Introduction:

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
Practises 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 an immoral or
criminal conduct. Bribery is considered unethical because it involves the exchange of something of
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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 on 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 contract said in January 2019 that without a 70% decrease on the
agreement's software component, the offer would fail due to 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 sales person 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.

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 practises 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 a 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 to have a management strategy in place to keep an eye on and stop
any unethical behaviour.

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Bribery is can alslo 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.

In conclusion, bribery is wrong for a company because it undermines the integrity of the system,
creates an unfair advantage, harms the economy, and creates a culture of corruption. Companies
should take proactive steps to prevent bribery from occurring and have clear guidelines in place for
employees.

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 the college, with next to no experience, I went into an
introspective zone.

I went out seeking for a 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 townhall, 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 it?

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 on the actions would have made the
situation better.

Source:
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(1) Bribery and Its Ethical Implications for Aid Workers in the ... - Springer.
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https://link.springer.com/article/10.1007/s11948-016-9750-9.
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(2) Corruption and Bribery | The Oxford Handbook of Business Ethics ....
https://academic.oup.com/edited-volume/28237/chapter/213327302.
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(3) The Ethics of Bribery: Theoretical and Empirical Studies - Springer.
https://link.springer.com/book/10.1007/978-3-031-17707-1.
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