California Governor Gray Davis has returned a $25,000 campaign contribution from Oracle just five days after the database giant signed a controversial $95m software deal with the state.
"The Governor has great respect for Oracle but has decided to give back the $25,000 he received in view of recent developments," Davis's office said in a statement.
Oracle executives handed over the cheque to Arun Baheti, California's ex-head of e-government, in a bar just five days after sealing the 10-year contract.
The contract has since become the centre of an almighty row over whether California grossly overpaid for the software.
An official report from the state auditor had earlier claimed that the deal would cost California $41m more than it needed to spend over the 10-year period and that the software was hardly being used.
Several leading state officials have resigned, including Baheti, who was forced out by Davis for accepting the donation at a bar in violation of administration policy.
In an interview with the San Francisco Chronicle, Baheti admitted that taking the cheque at a bar was foolish. "I am perfectly happy to admit I made a dumb mistake," he said.
But he insisted that his role in pushing the $95m contract was "being overstated".
The auditor's claims have been contested by Oracle, which says that more than 50 state and local agencies have already taken advantage of the discounts in the new contract.
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