Ex-Cognizant Executives Charged in Bribery Probe -- WSJ
19 February 2019 - 7:02PM
Dow Jones News
By Samuel Rubenfeld and Dave Michaels
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 19, 2019).
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.
Shares in Cognizant traded at $73.27 on Friday, a 0.21% increase
over Thursday's closing price, according to FactSet.
Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com and Dave
Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
February 19, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Cognizant Technology Sol... (NASDAQ:CTSH)
Historical Stock Chart
From Apr 2024 to May 2024
Cognizant Technology Sol... (NASDAQ:CTSH)
Historical Stock Chart
From May 2023 to May 2024