US Govt sues Oracle
By Sameer

Oracle is the second largest software products company in the world.  Oracle India is an integral pillar of the company with more than $2.5 billion invested in Indian operations since 2001. Oracle first teamed up with TCS in 1987, but by 1993, Oracle India had become a wholly owned subsidiary of Oracle Corp, USA. Its Indian operations employ about 23,000 professionals.

In March, 2010, Oracle announced that the companies as a whole saw revenue increase by 17 % to $6.4 Billion, but profits were down due to its acquisition of Sun. It reported a third quarter earnings of $1.2 Billion which was 10 percent less compared to the same period in the previous year.  New software license revenues increased by 13 % to $1.7 Billion.

Now, the US Government has sued Oracle for defrauding it in contracts worth hundreds of millions of dollars.  The US Government complaint reads in part

“
The United States has intervened and filed a complaint under the False Claims Act against Oracle Corporation and Oracle America Inc. The government alleges that Oracle defrauded the United States on a General Services Administration (GSA) software contract that was in effect from 1998 to 2006 and involved hundreds of millions of dollars in sales.

Under the contract, GSA used Oracle’s disclosures about its commercial sales practices to negotiate the minimum discounts for government agencies who bought Oracle software. The contract required Oracle to update GSA when commercial discounts improved and extend the same improved discounts to government customers. The suit contends that Oracle misrepresented its true commercial sales practices, ultimately leading to government customers receiving deals far inferior to those Oracle gave commercial customers.

"We take seriously allegations that a government contractor has dealt dishonestly with the United States," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "When contractors misrepresent their business practices to the government, taxpayers suffer."

The suit was originally filed on by Paul Frascella, Senior Director of Contract Services at Oracle. The False Claims Act allows private citizens with knowledge of fraud to file whistleblower suits on behalf of the United States and share in any recovery. If the United States intervenes in the action and proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim.
“

If convicted, Oracle could land up paying a fine of hundreds of millions of dollars.