Friday, July 30, 2010

The Oracle should have seen this coming

This story was presaged by Information Week previously, as noted by Guambat's alter ego.

Oracle Sued By Justice Department For Fraud
The Justice Department has sued Oracle, accusing the company of defrauding the government in a software contract valued at hundreds of millions of dollars in sales.

The department filed the complaint Thursday. The suit contends Oracle misrepresented its commercial sales practices in order to give government customers deals that were inferior to those given to commercial customers.

US accuses Oracle of software contract fraud
The suit alleges that Oracle Corp. and Oracle America Inc. defrauded the United States on a software contract with the General Services Administration (GSA) that involved hundreds of millions of dollars in sales.

"The contract required Oracle to update GSA when commercial discounts improved and extend the same improved discounts to government customers," the Justice Department said in a statement.

"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," it said.

Oracle Sued by U.S. in Case Claiming Overcharges
The U.S. lawsuit follows its intervention in a case filed in 2007 by Paul Frascella, a former Oracle employee who made similar claims. The False Claims Act lets private citizens sue on behalf of the government and share in any recovery. The Justice Department says it is cracking down on procurement fraud.

As Guambat recently noted, the new Financial Reform legislation extended that whistleblower concept beyond government contracting, into private industry.

Guambat is uncertain, from the news report, and too lazy to do the legal research (nothing in it for him in any event), whether the extension is only to businesses within the purview of the SEC. Even so, suits like this Oracle one can only embolden others to quickly jump in to take advantage of the outsourced financial regulation scheme.

When we seen the actions begin, we can say the Oracle foretold.

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