Cognizant agreed to pay a $25 million fine to settle charges of bribery, while two former top executives who allegedly arranged the deal were indicted today on federal criminal charges of conspiracy to violate anti-bribery laws.
According to the SEC complaint, in 2014 senior Indian government officials demanded a $2 million bribe from the construction company building Cognizant’s corporate campus in Chennai, India. At the time, two-thirds of the company’s employees worked in India.
“As alleged in the complaint, Cognizant’s President Gordon Coburn and Chief Legal Officer Steven E. Schwartz authorised the contractor to pay the bribe, and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders”, the SEC said in a statement. “Cognizant authorised the construction firm to make two additional bribes totalling more than $1.6 million. Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm.”
SEC Enforcement Division chief of the Foreign Corrupt Practices Charles E. Cain said that bribery to further corporate goals is an imaginary path to long-term success.
“While always the wrong choice, it is particularly egregious when senior executives chart that course for those they lead, as our complaint alleges here. We are committed to holding them accountable for their actions”, he said.
In 2016, the Teaneck, N.J.-based company, No. 7 on the 2018 CRN Solution Provider 500, launched an internal investigation into whether payments relating to facilities in India were made improperly and in possible violation of the FCPA or other laws, according to a filing with the U.S. Securities and Exchange Commission.
The company voluntarily notified the US Department of Justice (DOJ) and SEC about the investigation, and the company said it is fully cooperating with both agencies.
Cognizant announced in September 2016 that Coburn had stepped down as the company’s president after more than four years in the role. Coburn joined Cognizant in 1996 as the company’s senior director of group finance and operations and worked his way up the ranks, spending many years as the company’s chief financial officer.
Cognizant CEO Francisco D’Souza said: “We are gratified that both the DOJ and SEC recognised that we voluntarily and promptly notified US authorities of the potential issues in India more than two years ago, and cooperated extensively with their investigations.”
The SEC has charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws. The SEC is seeking permanent injunctions, monetary penalties, and officer-and-director bars against Coburn and Schwartz.
Coburn, 55, of Beaver Creek, Colorado, and Schwartz, 51, of Greenwich, Connecticut, were named in a 12-count indictment with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, seven counts of falsifying books and records, and one count of circumventing and failing to implement internal accounting controls.
