Cognizant Investigating Indian Payments -- Update

By Austen Hufford 

Cognizant Technology Solutions Corp. said it was conducting a probe into whether payments in India violated a federal anti-foreign-corruption act, and that its president had resigned.

Shares dropped 16% to $46.02 in morning trading on the news.

The company said Friday that it notified the Justice Department and the U.S. Securities and Exchange Commission that it was conducting an internal investigation into whether payments relating to facilities in India were made improperly and possibly violated the U.S. Foreign Corrupt Practices Act.

The information-technology provider also said in the same filing that President Gordon Coburn resigned and would be replaced by Raj Mehta, who had been the chief executive for IT services. No reason was given for Mr. Coburn's resignation, and the company didn't immediately respond to requests for comment on whether the resignation was related to the investigation.

While the investigation is in its early stages, the board's audit committee and outside lawyers are focusing it on a "small number of company-owned facilities."

At the end of 2015, the company had 162,500 employees, or nearly three-quarters of its workforce, in India across 45 locations with 22.6 million square feet.

Cognizant Technology helps companies outsource their information technology and other business processes.

In April, the Justice Department rolled out a new program that offers deep discounts for companies that cooperate with the government on foreign corruption violations as a way to crack down on individuals and unearth bribery violations.

In an annual filing, the company said violating anticorruption laws could subject it to criminal or civil penalties and could potentially disqualify them from government contracting or contracting with private companies in highly regulated industries.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

September 30, 2016 11:23 ET (15:23 GMT)

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