Time to look at our backyard for outsource contractors
Two former executives of outsourcing-operations company Cognizant Technology Solutions Corp. were charged by U.S. authorities with foreign bribery for allegedly approving illicit payments to help build a corporate campus in India.
The Teaneck, N.J.-based company also agreed to pay $25 million to settle with U.S. authorities.
Gordon Coburn, the company’s former president, and Steven Schwartz, its former chief legal officer, authorized a $2 million bribe to at least one government official in India to secure permits necessary for the construction of an office campus there to support roughly 17,000 employees, prosecutors said.
“Bribery to further corporate goals is an illusory path to long-term success,” said Charles E. Cain, chief of the Securities and Exchange Commission’s antiforeign-bribery unit.
Cognizant has more than 250,000 employees globally, more than half of whom work in various locations in India . Cognizant helps companies outsource their information technology and other business processes. Earlier this month, the company reported revenue of $16 billion in 2018, up 8.9% from the year prior.
To conceal Cognizant’s role in the bribery scheme, Messrs. Coburn and Schwartz, and others, agreed to use a construction company to secure the permit, prosecutors said. The construction company would pay the bribe, and Cognizant would later reimburse the firm through disguised cost overruns on the project, located in Chennai, India, prosecutors said.
The construction company received the permit in late June 2014; between March 2015 and January 2016 Cognizant issued several payments to the construction company, including a reimbursement for the bribe and related expenses, according to prosecutors.
“The allegations…describe a sophisticated international bribery scheme authorized and concealed by C-suite executives of a publicly traded multinational company,” said Brian A. Benczkowski, an assistant attorney general, in a statement.
Hank Walther, an attorney for Mr. Coburn, said he was disappointed that U.S. authorities chose to pursue the allegations. “Mr. Coburn intends to vigorously fight all charges,” he said.
Roberto Finzi, a lawyer for Mr. Schwartz, said his client was innocent and did nothing wrong. “He will fight these false and unfair charges,” he said.
Messrs. Coburn and Schwartz were charged in a 12-count indictment returned Thursday by a federal grand jury in New Jersey, prosecutors said. They were charged with three counts of violating the Foreign Corrupt Practices Act, as well as seven counts of falsifying books and records, a count of circumventing accounting controls and a conspiracy count.
The FCPA, which is jointly enforced by the Justice Department and the Securities and Exchange Commission, prohibits the use of bribes to government officials to get or keep business.
The two men were also sued in a civil complaint by the SEC, which seeks permanent injunctions, monetary penalties and officer-and-director bans against them.
Prosecutors on Friday also announced that they declined to prosecute the company, citing Cognizant’s self-disclosure of the allegations, as well as its cooperation and remediation. Cognizant agreed to pay $19 million in disgorgement and a $6 million civil penalty to the SEC to resolve the agency’s claims.
Cognizant said it was pleased to resolve the case, citing its voluntary self-disclosure, internal investigation and cooperation. “It is important to note that this entire matter did not involve our work with clients or affect our ability to provide the quality services our clients expect from us,” said Francisco D’Souza, the company’s vice chairman and CEO, in a statement.
Edited by Sdf4786k, 15 April 2019 - 10:39 AM.