Cognizant Looks To Settle Indian Bribery Case For $95M
Cognizant Technology Solutions and the plaintiffs in the case, stemming from an alleged $2 million bribe two of the company’s top executives authorized a contractor to pay to senior Indian government officials, are now looking to the District Court handling the case to sign off on their $95 million settlement.
Global solution provider Cognizant Technology Solutions said it is looking for court approval of a $95 million settlement related to a securities class action stemming from allegations the company in 2015 violated the U.S. Foreign Corrupt Practices Act.
Cognizant, in a Tuesday SEC filing, said that company and a group of investors who purchased its common stock between February 27, 2015 and September 29, 2016 have agreed that Cognizant will pay $95 million, inclusive of attorneys’ fees and litigation expenses, to settle the allegations.
The company, without admitting guilt, is asking the U.S. District Court for the District of New Jersey to approve the settlement.
“The Company and the other defendants expressly deny that the plaintiffs in the securities class action have asserted any valid claims as to any of them,” Cognizant wrote in the SEC filing.
Teaneck, N.J.-based Cognizant is No. 6 on CRN’s 2021 Solution Provider 500 list.
The allegations stem from revelations that Cognizant in 2014 authorized a contractor building the company’s new corporate campus in Chennai, India to pay a bribe of $2 million to senior Indian government officials. At the time, two-thirds of the company’s employees worked in India.
The initial revelations of the alleged bribery in September of 2016 led to Cognizant launching an internal probe into whether certain payments relating to facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act or other laws.
That investigation was conducted under the oversight of Cognizant‘s Audit Committee with the assistance of outside counsel. Cognizant at the time said it voluntarily notified the U.S. Department of Justice (DOJ) and SEC about the investigation and was fully cooperating with both agencies.
The case also led to the resignation of Cognizant President Gordon Coburn after two decades with the company, the last four of which he served as president.
Cognizant in early 2019 agreed to pay a $25 million fine to settle charges of bribery, while federal prosecutors indicted Coburn and Steven Schwartz, the company’s chief legal officer at the time, for authorizing the contractor to pay the bribe and then directing their subordinates to conceal the bribe by doctoring the contractor’s change orders.
Cognizant declined to comment on the settlement.
However, the company, in a statement emailed to CRN, said, “Cognizant has entered into a settlement to resolve a securities class action suit. We expect a substantial majority of the $95 million settlement payment will be paid by the Company’s insurers.
“The settlement, subject to the approval of the United States District Court for the District of New Jersey, would resolve a previously disclosed securities class action filed on behalf of plaintiffs who purchased Cognizant’s common stock during the period between February 27, 2015 and September 29, 2016.
“This agreement is not an admission of liability by Cognizant, but is rather to eliminate the uncertainty, burden, and expense of further protracted litigation.”