Oracle's controversial $95m software contract with the state of California may become the subject of a federal investigation.
The California Assembly Republicans, who are trying to make hay over a Democrat embarrassment, have asked for an investigation by the US Attorney's Office.
The lawmakers have accused Governor Gray Davis's Democrat office of seeking to limit any investigations into the deal.
Bill Simon, the Republican challenger for governor, said in a statement: "Instead of co-operating, it appears that the Governor is trying to squash the investigation."
The Governor's office has maintained that Davis knew nothing about the deal when it was signed on 31 May last year.
But a recent audit found that the $95m, six-year software licensing agreement could cost the state $41m more than it would have spent without the deal.
Additional conflict arose when the Governor's chief technology adviser, Arun Baheti, resigned unexpectedly last Thursday.
The departure followed reports that Baheti admitted to meeting an Oracle lobbyist at a bar and accepted a $25,000 cheque for the Governor's campaign while negotiations over the Oracle software contract were taking place.
According to a report in the Sacramento Bee newspaper, within a week of the contract being signed on 5 June, Davis's political committee reported receiving the $25,000 campaign contribution from Oracle.
In his resignation letter, which appeared in the newspaper, Baheti said: "When I was briefed on the Oracle contract and supported the concept of an enterprise licensing agreement, it is apparent in retrospect that I should have more vociferously raised questions about the details.
"Had I asked more questions of the Department of Information Technology [DIT] and the Department of General Services [DGS], they might have seen the potential problems. For that I must take responsibility."
Baheti's departure as California's director of e-government follows the Governor's suspension of Elias Cortez, the director of the DIT, and the resignation of Barry Keene, director of the DGS, for his role in securing the contract.
In yet another twist, the Governor's legal affairs chief, Barry Goode, directed state departments involved in the licensing deal to retain all documents and electronic files related to the Oracle contract, according to newspaper accounts.
This followed the news that state Attorney General Bill Lockyer, who has already launched a criminal investigation into the contract with Oracle, asked state officials to investigate possible illicit document shredding at the DIT.
Noting that there was no conclusive evidence that any shredding or destruction of documents occurred, Lockyer has still asked a team of special agents and computer forensic specialists to remove equipment and paperwork from the DIT's office.
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