U.S. officials are investigating whether Oracle illegally bribed foreign government officials to win business, but some experts say it's just the cost of doing business.
According to The Wall Street Journal, the Federal Bureau of Investigation, U.S. Department of Justice and Securities and Exchange Commission are looking into whether Oracle bribed government officials in several African nations in order to sell its database and application software there. The company might be prosecuted under the Foreign Corrupt Practices Act, which prohibits U.S. companies from bribing foreign officials to win business. According to the story, the investigation has been ongoing for at least a year.
Law enforcement agencies tend to avoid picking on any one company too much and move from firm to firm. These agencies look like they are enforcing the law but in reality this simply becomes another tax as generally the result is fines, not jail time.
Rob Enderle, principal analyst, Enderle Group
The result may be large multimillion-dollar fines levied upon Oracle, but one analyst said that the fines might just be part and parcel of doing business in other countries.
“The real question is whether increased enforcement by the FBI and DOJ will have any impact on foreign citizens demanding or expecting bribes,” said Charles King, the principal analyst at Pund-IT Inc.
King later added that “if a market has the potential to deliver hundreds of millions or billions of dollars in sales, millions or tens of millions of dollars in possible fines might simply be included in the cost-benefit analysis.”
Rob Enderle, principal analyst at the Enderle Group, said that the fines levied upon companies are closer to taxes than they are fines.
“Law enforcement agencies tend to avoid picking on any one company too much and move from firm to firm,” Enderle said. “These agencies look like they are enforcing the law but in reality this simply becomes another tax as generally the result is fines, not jail time.”
Enderle said that bribery is often a requirement for closing deals in foreign countries, and so getting caught is like a natural disaster – it’s just something that happens that companies have to deal with. Enderle added that the corporate office is typically “firewalled” from the practice and so has no official knowledge of it, so they can’t be held criminally accountable. Yet Enderle said that they typically know about the practice and the risk.
According to the Journal story, the federal government has increased enforcement of antibribery laws, citing an increase from five enforcement cases in 2004 to 24 in 2010. Earlier this year, IBM agreed to pay the SEC $10 million over allegations that IBM paid bribes in Asia. And federal authorities are also investigating Hewlett-Packard Co. over alleged bribes in Russia.
“Evidently, and unfortunately for Oracle, it is their turn to be taxed,” Enderle said.