Indian Railways may consider blacklisting Oracle Corp. if an internal inquiry into allegations that the database software maker’s Indian arm paid bribes to railway officials in 2019 is established, two officials privy to the development said.

The terms of reference of the internal inquiry by the railways aim to ascertain facts based on which the US Securities and Exchange Commission (SEC), in a 27 September order, fined Oracle $23 million for violating the Foreign Corrupt Practices Act.

Oracle had allegedly paid bribes to an official of a transportation company, majority owned by the railway ministry. The ministry will also look at whether such payments were also made earlier to bag contracts from state-owned enterprises (SoE).

One of the officials cited above said that the railway ministry has reached out to SEC and Oracle, seeking details about the bribery charges and involvement of the railway entity and officials.

Once all details come in, and the railway inquiry pinpoints specific individuals and involvement of any of its entities in the bribery scandal, charges would be framed against its officials, and Oracle India may face a ban from participating in railway contracts and, resultantly, also get blacklisted from participation in other government contracts in India for a specific period.

The SEC order said that Oracle allegedly created slush funds to bribe foreign officials in the United Arab Emirates, India, and Turkey. It said Oracle channelled $400,000 into an Indian outfit that had a reputation for paying officials of state-owned enterprises. The order said Oracle sales employees in India kept a buffer of $67,000 to potentially make payments to a specific Indian official in 2019 to bag a railway contract.

Also, the SEC order said that a sales employee of Oracle India in January 2019 sought 70% discount on the software component of a deal from an authorized French official even though Oracle India faced no competition in the deal because the railway enterprise 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 resolved charges relating to the creation of millions of dollars of slush funds by Oracle India, 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,” an Oracle spokesperson said.

A query sent to the ministry of railways remained unanswered till the time of going to press.

But officials said on condition of anonymity that the SEC findings were very specific and serious in nature, and if the railway inquiry 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 getting blacklisted from participating in other government contracts, according to government rules. But a decision in this regard would follow due process and be taken at the highest level, the officials said.

Railway officials are carrying out the current internal investigation, 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’ inquiry.

While the 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 railway ministry has 12 public sector undertakings under its administrative control.

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