Oracle is being sued by a former employee who alleges she was fired for complaining about improper accounting practices in the cloud services business.
Former senior finance manager at Oracle, Svetlana Blackburn, filed a whistleblower lawsuit in U.S. District Court in San Francisco, accusing upper management at the company of trying to push her to "fit square data into round holes" in order to make results look better, the filing claims.
Blackburn goes on to claim that bosses, "instructed her to add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers, an act that plaintiff warned was improper and suspect accounting."
Oracle spokeswoman Deborah Hellinger said: "We don’t agree with the allegations and intend to vigorously defend the matter."
Blackburn claims that a few weeks after threatening to blow the whistle on the practice of padding Oracle’s cloud figures she was fired. The filing says that Blackburn’s firing on 15th October 2015 came one month after the alleged wrongdoing and two months after a positive performance review.
The claim is that Oracle has broken anti-retaliation provisions of the federal Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The lawsuit seeks punitive damages, double back pay and other remedies.
These allegations come at a time when Oracle is visibly pushing strongly in its transition to being a cloud company. The company reported in March that total cloud revenues rose 40% to $735m for its third quarter results.
Oracle CEO Safra Catz said at the time: "Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%. These two factors will ignite substantial EPS and cash flow growth over Oracle’s next few quarters."
Concerns have been raised about the state of cloud revenue reporting, with former Microsoft CEO Steve Ballmer recently calling the use of run rate reporting "bulls**t". The lack of visibility regarding profit margins and sales of cloud by some of the leading public cloud vendors has created a murky view of how well the vendors are actually doing.
Amazon first started reported financial results for its cloud unit, Amazon Web Services, in April 2015, but Microsoft with its Azure offering and Google Compute Engine don’t report cloud financial results separately.
Blackburn has filed for whistleblower status, which if granted will not only give her immunity from prosecution but also a portion of any fines Oracle may have to pay if the allegations are proven.
Oracle is no stranger to legal proceedings having recently lost its $9bn lawsuit against Google over the use of Java software code in its Android operating system. The company is also in the middle of a legal battle with Hewlett-Packard, with HP seeking $3bn in damages from Oracle in claims that the company was responsible for a fall in sales of one of its revenue generating products.
