A third former executive of Cognizant Technology Solutions has settled charges with the Securities and Exchange Commission for violating the Foreign Corrupt Practices Act by participating in a scheme to bribe an Indian government official.
The SEC announced Sept. 13 it settled charges with Sridhar Thiruvengadam, the former chief operating officer of Cognizant. According to the SEC’s order, 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.
The SEC’s order finds four Cognizant executives, including Thiruvengadam, met by videoconference to authorize the bribe payment and devise a scheme to cover it up in the company’s books. According to the SEC order, Thiruvengadam later helped to conceal the payment by signing false sub-certifications to the management representation letters Cognizant provided to its independent auditor.
The SEC’s order finds Thiruvengadam violated the FCPA’s internal accounting controls and record-keeping provisions. Specifically, the order finds he violated Exchange Act Section 13(b)(5) and Rules 13b2-1 and 13b2-2 and caused Cognizant’s violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B).
Without admitting or denying the findings, Thiruvengadam agreed to pay a civil penalty of $50,000.
In February 2019, Cognizant agreed to settle the SEC’s civil claims for $25 million. That same month, the SEC and Department of Justice filed civil and criminal actions in the United States District Court for the District of New Jersey against two additional Cognizant executives—President Gordon Coburn and Chief Legal Officer Steven Schwartz—alleging anti-bribery violations concerning the same conduct.
However, the Department of Justice and the U.S. Attorney’s Office for the District of New Jersey declined prosecution of Cognizant after considering the factors set forth in the DOJ’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 at the time of that declination. “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 added. “We have also made further enhancements to our compliance processes, procedures, and resources.”