Ex-Employee Sues Oracle Over Alleged Cloud Accounting Shenanigans, Oracle Plans Countersuit

Oracle's cloud accounting practices are under scrutiny this week after a former employee filed a civil lawsuit against the vendor alleging that it inflated its cloud sales figures.

Svetlana Blackburn, who spent 13 months as a senior finance manager in Oracle's North America Software-as-a-Service business, alleges her superiors pressured her to bolster cloud services sales figures in financial reports, and then fired her after she threatened to blow the whistle on the accounting improprieties.

Blackburn's managers instructed her to add "millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers," Blackburn's lawyer Daniel Velton wrote in a civil complaint filed Wednesday. Velton didn't respond to a request for comment.

When Blackburn warned one manager about the "dangers of a lack of billings, and the history of bad accruals that never resulted in billings," she was told her comments were "irritating," according to the complaint.

After several weeks of trying to persuade her superiors to stop these practices, Blackburn was fired from Oracle in October 2015, according to the complaint.

Blackburn's whistleblower actions are legally protected under the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, Velton said in the complaint.

Oracle spokeswoman Deborah Hellinger said in an emailed statement that the vendor is confident that its cloud accounting is "proper and correct" despite Blackburn's allegations.

"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," Hellinger said in the statement.

After a late entry to the market for cloud software and services, Oracle is now intent on showing it can be a dominant player in the space. Yet according to some partners, the lofty figures Oracle cites as evidence of cloud sales growth don't reflect real customer adoption.

CRN reported last June that Oracle had begun offering its salespeople up to five times their normal sales commissions for getting customers to buy Oracle cloud services. But some salespeople took advantage by selling customers "cloud credits" -- software licenses redeemable for cloud services -- they didn't want or need, partners told CRN.

Oracle has also stepped up audits of customers to ensure they're paying for the software they're using. In cases where Oracle determines a customer owes it money, its salespeople have offered to waive back support and retroactive licensing costs if the customer agrees to buy cloud credits, partners told CRN.

"We've had a couple of clients who've bought Oracle cloud credits because they wanted to buy Oracle cloud. But most are buying them to make audits go away," one source who works with Oracle told CRN.