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Shareholder Lawsuit: An ‘Oracle’ of Tech’s Racial Reckoning to Come?

Larry Ellison’s company isn’t the only one facing accusations of discrimination. Solid8 and Cisco are hitting the news, too.

Kelly Teal

July 8, 2020

8 Min Read
Shareholder Lawsuit: An ‘Oracle’ of Tech’s Racial Reckoning to Come?
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As America faces its own diversity and racial reckoning, so, too, is the technology sector.

First up, 43-year-old Oracle Corp., founded by Larry Ellison.

On July 2, Oracle shareholder R. Andre Klein filed a 106-page complaint calling out the longtime Silicon Valley company for its lack of diversity, specifically regarding African Americans. Even though Oracle has repeatedly asserted in various public documents that “diversity and inclusion in our workforce starts at the top,” Klein says the vendor has failed.

“The Oracle board has lacked diversity at all relevant times, and is one of the few remaining publicly traded companies without a single African-American director,” Klein says.

To that point, Klein lists the current members of the Oracle board, which consists of four women and 10 men, none of whom is black.

“Founded in 1977, Oracle’s board today in 2020 has no African Americans and no Latinos; and no Asian‐American or other minority representatives aside from Vishal Sikka,” the lawsuit reads. “And, none are in offing.”

For Klein, “actions speak louder than words.”

“If Oracle simply disclosed that it does not want any Black individuals on its board, it would be racist but honest,” Klein writes. “But Oracle’s directors, wishing to avoid public backlash, have done the opposite — they have repeatedly made gross misrepresentations in the company’s public statements by claiming to have a multitude of policies, internal controls and processes designed to ensure diversity both at the management level and the board itself.”

However, Klein says, the policies “are not worth the paper they are printed on.” Oracle, Klein adds, remains one of the “oldest and most egregious” ‘Old Boys’ Clubs’ in Silicon Valley.

“A sign advising applicants, ‘Blacks Need Not Apply’ might as well hang at the entrance to the company’s headquarters,” Klein says.

Oracle declined to comment to Channel Futures about the lawsuit.

This is not the first time Oracle has come under scrutiny for the composition of its board or company, or issues of possible discrimination. Late last year, some members of Congress called out the company for its hiring and management practices.

“The fact that African Americans make up 13% and Asian Americans make up 5.6% of the U.S. population but 0% of Oracle’s board and leadership team is inexcusable,” the lawmakers said in a Nov. 22 letter from the House Tech Accountability Caucus and Tri-Caucus.

Earlier in 2019, another arm of Congress asked Oracle to talk about allegations of pay discrimination. The U.S. Justice Department in January of last year sued Oracle for short-changing women and minorities in wages owed.

Oracle disputed all the charges.

Solid8 Founder: ‘Disgusting Racist Remarks’

Next up, a seemingly unprovoked and now-viral racist tirade on the part of San Francisco-based Solid8’s founder and CEO, Michael Lofthouse.

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Solid8’s Michael Lofthouse

On July 4, Lofthouse was dining at a posh Carmel Valley restaurant when he started in on an Asian family — and for no apparent reason.

“[G]o back to whatever [expletive] Asian country you’re from,” Lofthouse says on the recording. He adds, “Trump’s gonna [expletive] you.”

Jordan Chan caught the incident on video. (Warning: language. The restaurant tossed Lofthouse out, by the way.)

“We were celebrating my tita’s birthday, literally just singing happy birthday to her and taking pictures, when this …

… white supremacist starts yelling disgusting racist remarks at us,” she wrote on Instagram.

Lofthouse commented on Chan’s post, then later deleted the message, which was derogatory. He since has issued an apology, which few people on the interwebs – along with Chan’s family – are taking as sincere.

“My behavior in the video is appalling,” Lofthouse told ABC7 in the Bay Area. “This was clearly a moment where I lost control and made incredibly hurtful and divisive comments. I would like to deeply apologize to the Chan family. I can only imagine the stress and pain they feel.” He goes on to say, “I was taught to respect people of all races, and I will take the time to reflect on my actions and work to better understand the inequality that so many of those around me face every day.”

Raymond Orosa, Chan’s uncle, said he believes Lofthouse was “just saving face” with the statement.

“I think he really meant what he said and what he did,” Orosa told ABC7. “I don’t believe his words because his actions speak louder than the words he’s saying.”

Lofthouse posted other inflammatory comments, now removed, on the Instagram page of a Chan and Orosa family supporter. He wrote, “Asian [expletive]” and “Come near me or my people and you are [expletive] dead.”

Solid8, established in 2017, is a cloud computing consultancy. Its website contains no information. On its LinkedIn page, the company bills itself as a firm that guides clients through the cloud vendor selection process for solutions including UCaaS, SD-WAN, security and more. Lofthouse has since removed his personal LinkedIn page, and Twitter blocked his account. He has a history of vandalism and a subsequent restraining order filed against him, as well as since-dismissed charges of domestic battery and destruction of telephone lines.

Lofthouse came to the United States in 2010 from the U.K.

Cisco Embroiled in Caste-Discrimination Suit

Finally, in the latest example of technology’s racial reckoning, the state of California is accusing Cisco Systems of discrimination.

Reuters reports that regulators say the vendor allowed two Indian-American managers to harass an employee because he hails from a lower caste than them.

The state filed a lawsuit last month against Cisco in federal court. Regulators have not named the employee who allegedly suffered the discrimination. The document does say he has served as a principal engineer at Cisco’s San Jose headquarters for almost five years. It also states “that he was born at the bottom of caste hierarchy as a Dalit, once called ‘untouchables,’” Reuters reported.

The lawsuit does call out two former Cisco engineering managers as defendants, and accuses them of internally enforcing caste hierarchy.

As Reuters noted, Cisco, as well as a number of other Silicon Valley employers, hires thousands of Indian immigrants. Reuters says most of the people working in the U.S.’ tech hotspot were born in high castes. India banned caste-based discrimination 65 years ago. Nonetheless, as Reuters pointed out, Dalits in India “still struggle with access to education and jobs.”

“Cisco is committed to an inclusive workplace for all,” a Cisco spokesperson told Channel Futures. “We have robust processes to report and investigate concerns raised by employees which were followed in this case dating back to 2016, and have determined we were fully in compliance with all laws as well as our own policies. Cisco will vigorously defend itself against the allegations made in this complaint.”

2020: The Year of Racial Reckoning in the United States?

Throughout the United States, 2020 has been fraught with tension. From COVID-19-spawned lockdowns that disproportionately affect minorities and divisive political stances with racial elements, to nationwide protests and riots stemming from the police murder of George Floyd, the country no longer appears able to avoid issues of race.

Now, also, the U.S. technology industry is coming face to face with …

… its own, arguably overdue, racial reckoning.

According to 2018 figures from Gartner, high-tech has a Black composition of 7% compared to 14% in all private industries; a Hispanic composition of 8% versus 14%; an Asian-American composition of 14% contrasted with 6%; and a white composition of 69% against 63%.

In a July 1 blog, Barika Pace, senior director and analyst at Gartner, noted that many tech companies “persistently fail to recruit women and minorities, and more struggle to retain them.”

Not only does this impact leadership, innovation and adoption, Pace said, a lack of diversity also affects the bottom line.

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Gartner’s Barika Pace

“For example, one particular investigation found that gender-balanced teams were more likely to identify gaps in the ideation phase and proved to be more profitable,” Pace wrote.

Pace’s advice for technology firms, which include those in the channel? For starters, evaluate existing recruitment practices and shift to mindsets that reward diversity in thinking. Second, review “diversity debt,” recruitment sources, job posting and hiring processes. When it came to job titles, Pace cites one technology company that discovered changing a role from “Hacker” to “Security Engineer” doubled the number of female applicants.

“Altering recruitment standards will reshape the type of candidate you hire and ultimately increase the diversity of the corporate perspective to create a culture that encourages digital imagination and yields product innovation,” she said.

Additional guidance from Pace includes:

  • Developing actions to overcome biases. The idea is to improve trust, eliminate deeply rooted stereotypes in communication, and promote positive behavioral change and training.

  • Diversifying hiring teams. If your company faces large diversity debt, ask for outside help.

  • Talking to current employees. Circulate surveys about perceived inclusion of unrepresented groups to identify areas of improvement. Track progress regularly.

  • Reducing reliance on employee referrals. A University of Georgia study showed employees tend to refer candidates of the same race, gender and ethnicity.

  • Polling job candidates. At the end of a hiring cycle, look for trends related to diversity and inclusions to pinpoint ways to improve.

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About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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