Oracle (Former Sun Microsystems) to pay $46 million to settle Sun kickback charges

February 2011

Sun Microsystems new parent, Oracle, is paying out $46 million over kickback allegations that got Sun in a bit of trouble.

Levied by the U.S. government, the fine will settle claims that Sun Microsystems had paid kickbacks to technology partners such as Accenture in return for recommendations that key government agencies buy from Sun. Sun allegedly paid outside consulting companies any time one of them convinced a federal agency to purchase a Sun product or service, the Department of Justice announced yesterday.

Beyond Sun, several other tech players were caught up in the kickback allegations, including Hewlett-Packard, which was forced to pay the government $55 million last summer to settle charges. Other companies involved, such as Computer Sciences Corp., IBM, and PriceWaterHouseCoopers, have also since settled by paying fines to the government.

The allegations first came to light in 2004 as part of a lawsuit filed by two whistleblowers Norman Rille and Neal Roberts. Rille, then a senior manager with Accenture, and Roberts, a partner at PricewaterhouseCoopers, had filed a civil complaint alleging that HP had paid kickbacks. The Justice Department eventually joined and expanded the investigation in 2007.

The settlement with Sun also resolves claims that the company gave incomplete and inaccurate information to the General Services Administration during contract negotiations in the late ’90s, resulting in defective pricing of a Sun contract with the U.S. Postal Service as well GSA contracts held by two resellers of Sun products. Terms of the contract required that Sun accurately reveal to the GSA how it did business in the private sector so that the agency could use that information to fairly negotiate Sun contracts in the public sector.

“Kickbacks, illegal inducements, misrepresentations during contract negotiations – these undermine the integrity of the government procurement process and unnecessarily cost taxpayers money,” Tony West, assistant attorney general for the civil division of the Department of Justice, said in a statement. “As this case demonstrates, we will take action against those who abuse the public contracting process.”