Cognizant has told a district court in New Jersey that the litigation over improper payments related to securing SEZ licenses in India has named two former Cognizant executives but not the company itself. Hence, Cognizant told the court that all claims against it should be dismissed.
A lawsuit, filed in 2018 by Union Asset Management Holding AG, Amalgamated Bank, acting as trustee for the LongView Collective Investment Funds, and the Fire and Police Pension Association of Colorado, alleged that Cognizant violated certain sections of the Securities Exchange Act of 1934 by making “materially incomplete, false, and misleading statements that concealed a bribery scheme.” The plaintiffs also alleged that this scheme overrode the company’s internal controls to facilitate the bribery.
Cognizant has responded in the latest court filing saying: “Far from the “pervasive operation” to secure “lucrative” SEZ licenses that plaintiffs allege, the conduct alleged in the DOJ (department of justice) and SEC (Securities & Exchange Commission) filings involved only “a limited group of rogue employees” who authorised improper payments to obtain routine permits and “conceal[ed that conduct] from corporate management”.
In February, SEC said that Cognizant has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA), and two of the company’s former executives were charged for their roles in facilitating the payment of millions of dollars in a bribe to an Indian government official.
The SEC’s complaint had alleged that in 2014, a senior government official of Tamil Nadu demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million sqft campus in Chennai.
“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 also alleges that 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 said in a press release issued in February.
The SEC charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.
A recent Law 360 report said Coburn filed a dismissal bid as well, saying that if the claims against Cognizant are dismissed, the investors will have no valid allegations against him either.
