Cognizant to pay $25M to resolve FCPA violations

Cognizant Technology Solutions, a technology services company, has agreed to pay a civil penalty of $25 million to settle charges that it violated the Foreign Corrupt Practices Act. Additionally, two former executives of Cognizant were charged for their roles in facilitating the payment of millions of dollars in a bribe to an Indian government official.

The Securities and Exchange Commission’s complaint alleges that in 2014, a senior government official in India demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million square foot campus in Chennai, India. As alleged in the complaint, Cognizant’s President Gordon Coburn and Chief Legal Officer Steven Schwartz authorized the contractor to pay the bribe and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders.

The SEC further alleges that Cognizant authorized the construction firm to make two additional bribes totaling more than $1.6 million. Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm.

The SEC charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws. The SEC said it’s also seeking permanent injunctions, monetary penalties, and officer-and-director bars against Coburn and Schwartz.

Without admitting or denying the allegations, Cognizant agreed to pay disgorgement and prejudgment interest of approximately $19 million and a penalty of $6 million.

The Department of Justice and the U.S. Attorney’s Office for the District of New Jersey said they’ve declined prosecution of Cognizant after considering the factors set forth in the Department of Justice’s Principles of Federal Prosecution of Business Organizations and the Corporate Enforcement Policy. Such considerations include Cognizant’s prompt voluntary self-disclosure, cooperation and remediation, as well as Cognizant’s disgorgement to the Department and the SEC of the cost savings that resulted from the bribery scheme.

“We are pleased to reach these resolutions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission,” Cognizant CEO Francisco D’Souza said in a statement. “Further, we are gratified that both the DOJ and SEC recognized that we voluntarily and promptly notified U.S. authorities of the potential issues in India more than two years ago and cooperated extensively with their investigations. “

“We undertook a comprehensive internal investigation under the oversight of the audit committee of the board of directors, with the assistance of outside counsel,” D’Souza said. “We have also made further enhancements to our compliance processes, procedures and resources.”

On Feb. 14, Coburn and Schwartz were indicted on criminal charges of violating and conspiring to violate the FCPA’s anti-bribery and accounting provisions in connection with the foreign bribery scheme. The case is assigned to U.S. District Judge Kevin McNulty of the District of New Jersey.