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Catch of the Week — Cognizant Technology to Pay $25M to Settle Bribery Allegations While Top Execs Face Civil and Criminal Charges

Posted  February 22, 2019

New-Jersey based tech company Cognizant Technology Solutions Corporation agreed to pay approximately $25 million-roughly $19 million in disgorgement and prejudgment interest and an additional $6 million in civil monetary penalties-to settle allegations the company violated the Foreign Corrupt Practices Act (“FCPA”) by bribing Indian officials. But the government’s enforcement doesn’t end there. Cognizant’s former president and chief legal officer are now the subjects of a DOJ criminal indictment and an SEC civil suit based on their alleged involvement in the scheme.

Per the SEC and DOJ, the bribes at issue were authorized in furtherance of Cognizant’s construction of a corporate campus in Chennai, India. Top company execs now facing both criminal and civil charges-former Cognizant president Gordon Coburn and Chief Legal Officer Steven E. Schwartz-allegedly authorized a $2 million bribe to a senior Indian government official in relation to the construction project. According to the SEC, the bribe was originally demanded of a Cognizant contractor, who was asked to pay the sum in exchange for the issuance of a necessary permit. Coburn and Schwartz allegedly became involved after the contractor elevated the issue to Cognizant. According to the pending civil complaint and criminal indictment, Coburn and Schwartz not only authorized the $2 million bribe in a videoconference with the Indian official, but also engineered a concealment scheme under which the illicit payment would be disguised to look like cost overruns on the construction project.

The FCPA addresses international corruption in two key ways:

  • the Act’s anti-bribery provisions prohibit individuals and businesses from bribing foreign government officials to obtain or retain business, and
  • the Act’s accounting provisions impose certain record keeping and internal control requirements and prohibit falsifying company books and records. Violations of the FCPA can lead to civil and criminal penalties, sanctions, and remedies, including fines, disgorgement, and/or imprisonment.

The criminal charges against Coburn and Schwartz include conspiracy to violate the FCPA, violating the FCPA, falsifying books and records, and circumventing and failing to implement effective internal controls. The civil charges are similar: SEC’s complaint alleges the two execs violated the FCPA’s anti-bribery, books-and-records, and internal controls provisions.

In addition to the $2 million bribe for which Coburn and Schwartz now face charges, Cognizant’s no-fault settlement with the SEC also resolved allegations against the company related to another $3.6 million in bribes paid to various Indian government officials.

Individuals with knowledge of FCPA violations may be able to make a claim through the SEC’s Whistleblower Program, which provides monetary rewards to whistleblowers. Whistleblowers need not be United States citizens or residents to report foreign corrupt practices, such as the bribery at issue here, to the SEC. If you have information about possible FCPA violations, and would like to talk to the whistleblower attorneys at Constantine Cannon, please contact us.

Tagged in: Catch of the Week, Criminal Proceedings, FCPA,