Oracle denies false accounting over cloud computing growth claims

Former employee was 'terminated for poor performance', insists Oracle

Software and systems giant Oracle has moved swiftly to try to scotch claims made by a former employee that the company engaged in false accounting in a bid to inflate apparent rates of growth in its cloud computing services.

The company has been keen in recent quarters to highlight the growth in revenues for its various cloud computing offerings as new software licence sales have faltered.

However, in a lawsuit filed this week, Svetlana Blackburn, a former senior finance manager at Oracle, claimed that she was fired when she objected to the accounting practices that more senior executives sought to implement.

In a statement released last night, Oracle claimed that its accounting practices around cloud computing are all above board and that she was simply fired for poor performance.

"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," said Deborah Hellinger, vice president of corporate communications at Oracle.

The brief statement comes after Oracle stock fell as news of the legal case percolated into mainstream news channels.

Blackburn had claimed that she was pressured to recognise non-cloud revenues as cloud in a bid by senior executives at Oracle to goose-up the appearance of growth in cloud computing. Starting from a low base, comparative to the company's existing software licence sales, the company could point to fast growth in cloud computing as proof that its transition to cloud was working.

It wouldn't be the first time that the company had been accused of false accounting. Oracle was almost bankrupted in 1990, four years after co-founder and CEO Larry Ellison had floated the company on the stock exchange, when a revenue recognition scandal revealed that the company had artificially inflated its revenues.

That led to a clear out of senior executives - a notable exception being Ellison - which helped lay the foundations for the company's subsequent fast growth, especially following the release of the Oracle 7 database.