On June 1, former senior Oracle finance manager Svetlana Blackburn filed a lawsuit against Oracle. According to the suit she filed in the U.S. District Court of North Carolina, Blackburn alleged, while under its employ, her superior had pressured her "to fit square data into round holes in an effort to bolster Oracle cloud services financial reports that would be paraded before company leadership, as well as the investing public."
The suit further alleged Blackburn was pushed by superiors to "add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers."
The suit added that "executives above [Blackburn] in the chain of command went ahead and added accruals on their own." The changes to the data, the suit claimed, might seem like small amounts, but would significantly influence the information provided to the public and to investors. According to the suit, the altered data would "end up in [Securities and Exchange Commission] filings and be touted on earnings calls, used to paint a rosier picture than actually existed on the ground."
In her suit, Blackburn claimed she confronted her superiors about absent billings and plans for re-accrual. It further claimed her superiors told her to ignore what was happening. According to the suit, she continued to resist, and on October 15, 2015, Oracle terminated Blackburn's employment.
Blackburn's suit implied the reason for her termination was her unwillingness to ignore improper accounting turned her into "more of a roadblock than a team player who would blindly generate financial reports using improper bases in order to justify the bottom lines that her superiors demanded to see."
Oracle called all of this into question. Deborah Hellinger, Oracle vice president and head of global corporate communications, said, "We are confident that all our cloud accounting is proper and correct. This former employee worked at Oracle for less than a year and did not work in the accounting group. She was terminated for poor performance, and we intend to sue her for malicious prosecution."
However, Oracle's investors appear to be taking this seriously. According to CNN Money, Oracle's stock fell as soon as the lawsuit became public knowledge and was down by 5% by midday last Thursday.
The actual suit Blackburn is bringing against Oracle accuses it of violating Whistleblower Protections under the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as retaliation under California Labor Code § 1102.5 and wrongful termination in violation of public policy. In other words, Blackburn is suing Oracle about the loss of her job, not the accounting practices.
Regardless, we are left with a case of "she said, she said" and the specter of a second lawsuit -- this one, Oracle's against Blackburn -- before Blackburn's case has gone to jury.
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