A former senior finance manager for US tech giant Oracle has launched a legal claim that the company sacked her after she voiced concerns about its approach to accounting for revenues in its cloud services division
Svetlana Blackburn has lodged a whistleblower and wrongful termination lawsuit in the US district court in San Francisco, which is thought likely to raise questions about how suppliers account for software services which are bought on a subscription basis rather than as a single package.
In her nine-page affidavit, Blackburn states that her tenure at Oracle, where she worked as a senior finance manager, North America SaaS/cloud revenue, ‘came to an abrupt end because she resisted, refused to engage in and threatened to blow the whistle on accounting practices she reasonably believed to be unlawful'.
Saying that Oracle senior managers were trying to force her to ‘fit square data into round holes’, Blackburn claims that the company was trying to bolster the financial reports for its cloud services division in a way which ‘veered from legal, ethical and company standards’.
Blackburn alleged she was told to add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers, an act that she warned was improper and suspect accounting.
The lawsuit states Blackburn’s concerns that this data ‘would end up in SEC filings and be touted on earnings calls, used to paint a rosier picture than actually existed on the ground’.
Despite her objections, Blackburn claims that executives above her in the chain of command went ahead and added accruals on their own. She expressed serious misgivings about their plans for re-accruals as well. A supervisor instructed her to ignore the absent billings that she had pointed out, because his intention was to reaccrue.
After confronting him about the dangers of a lack of billings, and the history of bad accruals that never resulted in billings, the supervisor told Blackburn that her statements were ‘irritating’. Her employment contract was terminated shortly afterwards, one month after the alleged wrongdoing began and two months after she had received a positive performance review.
In a statement Oracle said: ‘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.’
Three years ago, the Securities and Exchange Commission (SEC) investigated IBM over how it reports its cloud-computing revenue, an investigation that ended in 2014 with no enforcement action.
Oracle reported total revenues of $9bn (£bn) in its latest fiscal 2016 Q3 results released in March 2016, down 3% in dollars and up 1% in constant currency. Cloud plus on-premise software revenues were $7.1bn, down 1%.
Oracle has been approached for comment.
