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Oracle sued for $200 settlement

by on23 March 2012

Investor claims company trying to hush it up

An Oracle investor has sued the company and members of its board of directors for trying to "stonewall" a whistleblower lawsuit that ultimately resulted in a $200 million settlement.

Jordan Weinrib said Oracle CEO Lawrence Ellison and other past and present members of the company's board of directors, breached their duty to shareholders by engaging in prolonged litigation over the whistleblower's allegations. He said that Oracle knew that the allegations were true and the  board forced the government to expend additional resources litigating the action when the board knew the company was in a significant liability position. He said the additional litigation would raise the  price of settlement.

The whistleblower lawsuit was filed in 2007 by Oracle's former senior director of contract services, Paul Frascella, who accused the company of violating price-reduction clauses in federal contracts covering $775 million in goods, extending discounts to commercial clients without doing the same for government buyers.

Oracle paid more than $200 million to settle the lawsuit, including interest and payments for the whistleblower, the largest of its kind under the federal False Claims Act. Weinrib said that despite substantial evidence of wrongdoing, 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.

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