Cognizant Settles with the Government

Cognizant Technology Solutions (CTSH) will pay $25 million to settle bribery charges. The executives named are long gone and Cognizant isn’t being charged with any crimes.

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.

This was a terrible episode, but the company handled it well.

Posted by on February 19th, 2019 at 7:54 am


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