NEW YORK, March 22 (Reuters) - An Oracle Corp. investor sued
the company and members of its board of directors on Thursday
for allegedly trying to "stonewall" a whistleblower lawsuit that
ultimately resulted in a $200 million settlement.
The lawsuit filed by investor Jordan Weinrib in Delaware
state court said the defendants, including Oracle CEO Lawrence Ellison and other past and present members of the company's
board of directors, breached their duty to shareholders by
engaging in prolonged litigation over the whistleblower's
allegations, which the defendants allegedly knew to be true.
"The board forced the government to expend additional
resources litigating the action when the board knew the company
was in a significant liability position and that additional
litigation would certainly raise the ultimate price of
settlement," Weinrib said in the complaint.
The settlement in question was the result of a whistleblower
lawsuit filed in 2007 by Oracle's former senior director of
contract services, Paul Frascella, who accused the company of
violating price-reduction clauses in federal contracts covering
$775 million in goods, extending discounts to commercial clients
without doing the same for government buyers.
The U.S. Department of Justice intervened in the lawsuit in
2010. In 2011, Oracle paid more than $200 million to settle the
lawsuit, including interest and payments for the whistleblower,
the largest of its kind under the federal False Claims Act.
"Despite substantial evidence of wrongdoing, Oracle's board
of directors did not admit that these acts had occurred, enact
remedial measures and negotiate a resolution that involved a
small payment," Weinrib said in the complaint. Instead, by
litigating the case, Oracle drove up the ultimate settlement
price, harming taxpayers and shareholders alike, Weinrib said.
Weinrib is seeking an unspecified amount in damages on
behalf of shareholders. A spokesman for Oracle did not
immediately return a request for comment Thursday.
The case is Weinrib v. Ellison, in Delaware Chancery Court,
(Reporting by Jessica Dye)
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