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Oracle Investigation Grows

Posted by ryuzaki0 on from the too-late-for-rug-sweeping dept.

VValdo writes "Department heads resigning, millions of dollars wasted, documents shredded, the government investigating. No, it's not Enron-- as previously reported, the $95 million contract with Oracle is blowing into a full-fledged scandal in California, according to today's LA Times, The article begins, "California Highway Patrol officers moved in Thursday to halt shredding at the state's information technology department, and Gov. Gray Davis suspended the agency's chief amid a widening investigation of the state's multimillion-dollar computer contract with Oracle Corp.""

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  1. More details from LA Times columnist by John+Murdoch · · Score: 5, Informative

    More details on the emerging Oracle scandal, including a chronology of events for those just hearing about the story, can be found in George Skelton's Capitol Journal column, which ran in today's LA Times under the title "No Defense Tactic Can Hide This Ugly Scandal."

    Skelton's column is definitely worth the read--this is more than just a colossal sales job, and more than just a $25,000 campaign contribution to the governor oh-so-coincidentally two weeks after the deal. There are state legislators with family ties to this, and a startling lack of California employees (or departments) with any interest in using it.

    Given the jitters many people have about the securities business today, the most ominous comment might well be a brief mention at the bottom of Skelton's column:

    Oracle insisted this was a now-or-never deal--a onetime offer that would disappear the next day because it needed to impress Wall Street right then with a huge contract.

    CA was famous for years for doing all sorts of stuff to "make the numbers" at the end of each quarter. You can only do it for so long--once everybody figures out that Sears is always running sales, nobody is willing to buy at anything other than the sale price. Writ large, the same thing happens to companies that are motivated by this quarter's presentation to the securities analysts: eventually customers learn to wait for the last week of the quarter, when you can name your price.

    Oracle, in the go-go 90s, made money by the barrel--at one point a colleague observed that their margins were probably higher than the Medellin Cartel. If they have to resort to this kind of shenanigans to make the quarter's numbers, Oracle has bigger problems than a $25,000 payoff to the governor of California.