Oracle Accepts to $199.5 Million Federal Settlement

Oracle Corp. (NASDAQ:ORCL) has accepted to pay $199.5 million including interest to settle allegations that the software company failed to provide the discounts it had promised to the federal government, according to the U.S justice Department on Thursday.

The company will pay the fine to the General Services Administration the fine along with interest. This is the biggest False Claims Act settlement that the General Services Administration has won.

The allegations against Oracle date back to the year 1998. During this year Oracle entered into multiple agreements with the General Services Administration to supply technical support and software licenses to government agencies. According to the agreement between the private contractors and federal agencies, the private contractors have to disclose all pricing details, practices and policies, along with the discounts that are given to other customers.

It was an employee at Oracle named Paul Frascella who blew the whistle against Oracle saying that the company hid details about the discounts that it was providing its other customers. A lawsuit was filed against Oracle in 2007 alleging that the company was guilty under the False Claims Act.

The Department of Justice in a statement said that the United States government paid higher for the same services that it could have obtained at a lower cost because of fraudulent dealing by Oracle.

The whistleblower, Frascella is entitled to receive $40 million for blowing the whistle against Oracle. He was joined in his fight against Oracle by the Department of Justice in 2010.

Brian Miller, the General Services Administration Inspector said that the government of United States is trying aggressively to save tax payers money by cutting on taxes. Miller said that private contractors will not be allowed to rob taxpayers money by hiding the lowest possible prices.

According to an Oracle spokesperson, the company agreed to the $199.5 million agreement in order to avoid any kind of distraction and also the time and cost of litigation. The company still denies any kind of wrongdoing in the alleged case of charging higher prices to the federal departments. The spokesperson said that their company had strict controls over the policies that insure that the governments receive the best possible prices.

Oracle and Google are currently involved in a patent infringement lawsuit where Google is alleged to have infringed on multiple software patents belonging to Oracle’s Java language.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.