Feeds

Investor sues Oracle over $200m whistleblower payout

Ellison & Co. charged with 'gross mismanagement'

Security and trust: The backbone of doing business over the internet

An Oracle shareholder has filed a lawsuit against Larry Ellison & Co. for "gross mismanagement" in their handling of a long-running whistleblower case, alleging that by fighting a case they knew to be grounded in fact, they drove the ultimate settlement up to a hefty $200m.

"Rather than attempt to settle all claims at that time by the institution of appropriate corporate therapeutics and the paying of what would have been a small fine, the board insisted on digging in and litigating the matter extensively," shareholder Jordan Weinrib said in the complaint, Reuters reports.

According to Weinrib's filing in the Delaware Court of Chancery, Oracle's bullheadedness cost its shareholders – and, for that matter, taxpayers – a pretty penny. "Despite substantial evidence of wrongdoing," he says in the complaint, "Oracle's board of directors did not admit that these acts had occurred, enact remedial measures and negotiate a resolution that involved a small payment."

The case in question involved Oracle employee – now ex-employee, of course – Paul Frascella, who filed a complaint under the False Claims Act in May 2007, alleging that his company was involved in a "scheme ... to defraud the United States government by failing to disclose deep discounts offered to commercial customers."

Under law, Oracle was required to offer the US government the "best price given to the most favored customer." Frascella blew the whistle on his employer, and used the cover of the False Claims Act – which is specifically designed for such contract-fraud cases – to inform the US Department of Justice of Oracle's chicanery.

In June of 2010, the DoJ jumped into the fray, joining Frascella's suit against Oracle. Rather than admitting wrongdoing, revising its pricing structure, and paying what may well have been a slap-on-the-wrist fine, however, Oracle continued to dig in its heels.

Which, according to Weinrib's suit, was "gross mismanagement," wasteful of company resources, and a deriliction of fiduciary duty by Ellison, who is named in the shareholder's suit, and the company's board of directors, who are also named, both past and present.

The case ground through a complex litigation process, with the DoJ doubling down on Oracle by filing its own suit under the False Claims Act in July 2010. Oracle made some headway in its battle when the DoJ dropped some charges in November of that year, but eventually settled the case for in October of last year for $199.5m plus interest.

If, however, Ellison & Co., had thought they had put the whole matter behind them with that chunk o' change, Weinrib's suit – which seeks an unspecified amount of damages – is now a rude awakening.

Ellison and his board of directors are being taught what has been made abundantly clear with each and every corporate or political scandal from Watergate to Weinergate: it's not the offense that causes the most trouble – it's the cover-up. ®

Bootnote

This Frascella case isn't the only time that Oracle has slipped a few bucks to the Department of Justice. In February of last year, they paid the DoJ $46m to settle a case alleging that Sun Microsystems, borged by Oracle in April 2009 for $7.4bn, had bribed resellers.

New hybrid storage solutions

More from The Register

next story
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.