CORPORATE CRIME REPORTER
Oracle to Pay $98.5 Million to Settle False Claims
Act
Case – Whistleblower to Get $17.7 Million
20 Corporate Crime Reporter 40(1), October 10, 2006
Oracle Corporation will pay $98.5 million to settle a False Claims Act lawsuit.
Federal officials alleged that Oracle’s PeopleSoft unit quoted the government
prices for its software that were not “current, accurate and complete.”
As a result, the government paid inflated prices for software purchased over a period of eight years from 1997 to 2005.
The case was originally filed under the qui tam or whistleblower provisions of the False Claims Act by James A. Hicks.
Hicks is a former employee of PeopleSoft and the conduct alleged in the qui tam suit predated Oracle's acquisition of PeopleSoft.
Hicks will receive $17,730,000 of the total recovery as his statutory award.
When Oracle acquired PeopleSoft, it inherited PeopleSoft's liability under the General Services Administration contract.
The lawsuit alleged that during PeopleSoft's negotiation of its initial contract and two extensions of the contract's term, PeopleSoft understated the discounts it provided to commercial customers.
Federal officials alleged that PeopleSoft failed to disclose the true nature of its multiple product discounting practice, a program that afforded buyers incrementally steeper discounts off list prices or software products based on the number of products purchased at one time.
This, plus the use of non-standard discounts, caused at least one 1994 customer to obtain discounts of up to 74 percent off the listed price.
GSA
relied on the faulty disclosures and negotiated discounts for federal customers
that were much less favorable than the total discounts PeopleSoft's best commercial
customers
enjoyed.
As a result, federal agencies overpaid for software and related maintenance.
"Because PeopleSoft did not give GSA accurate pricing information, it negotiated higher prices for its products and services than it would have obtained if GSA had known the truth," said U.S. Attorney Rod Rosenstein in Baltimore. "The substantial recovery in this case will help to ensure that vendors provide truthful information and the government pays a fair price for products and services."
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