Cognizant to Pay $25 Million to Settle Bribery Claims

By Samuel Rubenfeld and Dave Michaels 

Two former executives of Cognizant Technology Solutions Corp. were charged by U.S. authorities with foreign bribery for allegedly approving illicit payments in India to build a corporate campus there.

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, were charged in a 12-count indictment returned Thursday by a federal grand jury in New Jersey, prosecutors said. The two men authorized a $2 million bribe to at least one government official in India to secure permits necessary for the construction of an office campus in India to support about 17,000 employees, prosecutors said.

"The allegations...describe a sophisticated international bribery scheme authorized and concealed by C-suite executives of a publicly-traded multinational company," Brian A. Benczkowski, an assistant attorney general, said in a statement.

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.

Hank Walther, an attorney for Mr. Coburn, said he's disappointed that U.S. authorities chose to pursue the allegations. "Mr. Coburn intends to vigorously fight all charges," he said.

A lawyer for Mr. Schwartz didn't immediately respond to requests for comment.

Prosecutors also on Friday announced that they declined to prosecute the company, citing Cognizant's self-disclosure of the allegations, as well as its cooperation and remediation.

Cognizant settlement includes $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 [e-mail] and Dave Michaels at [e-mail]

(END) Dow Jones Newswires

February 15, 2019 13:02 ET (18:02 GMT)

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