Sun Micro says may have violated U.S. bribery law

By Jim Finkle

BOSTON, May 8 (Reuters) - Sun Microsystems Inc (JAVA.O: Quote, Profile, Research), a hardware maker that Oracle Corp (ORCL.O: Quote, Profile, Research) is buying for more than $7 billion, said on Friday that it may have broken a U.S. law prohibiting companies from bribing foreign officials.

"We have identified potential violations of the Foreign Corrupt Practices Act, the resolution of which could possibly have a material effect on our business," Sun said in a 10-Q filing with the U.S. Securities and Exchange Commission.

The company said it had disclosed the activities to the U.S. Department of Justice as well as the Securities and Exchange Commission. It has hired outside attorneys to help it investigate the matter, which it discovered in its current fiscal year that began in July 2008.

Sun said it has also brought the matter to the attention of government agencies in the country where the questionable activities had occurred, though it did not identify that country.

"The outcome of these, or any future matters, cannot be predicted," Sun said in the regulatory filing.

Potential penalties could include fines, criminal sanctions and a ban from doing business with the U.S. federal government, Sun said. The federal government is one of Sun's biggest customers.

A Sun spokesman said he could not immediately elaborate on the 10-Q filing. An Oracle spokeswoman declined comment.

The company added that if the acquisition falls through it might be required to pay a $260 million breakup fee and reimburse Oracle up to $45 million in expenses. (Reporting by Jim Finkle; Editing by Derek Caney)