listed on nasdaq knowledgeable A $95 million settlement has been reached, subject to a judge’s approval, on Sept. 7 in a lawsuit alleging company shareholders concealed bribes to executives in India.
This is the latest development in the alleged bribery case involving Cognizant officials, which first came to light in 2016. Apart from this, the company has also entered into an agreement with the company. US Securities and Exchange Commission in connection with the case in February 2019 for $25 million.
What is the recent development in the alleged bribery case?
Cognizant said in an SEC filing on September 7 that it had entered into a settlement settlement for $95 million, subject to the approval of the United States District Court for the District of New Jersey, to resolve a class action complaint against the firm. and officers by certain shareholders.
Five class action suits were filed between October and November 2016 and were consolidated into a single class action in the US District Court for New Jersey. These were filed by shareholders who purchased the company’s stock between February 27, 2015 and September 29, 2016.
Cognizant said in a statement that the settlement would be covered by the company’s insurers. “The Company and the other defendants are entering into a settlement agreement to eliminate the uncertainty, burden, and expense of further protracted litigation. The Company and the other defendants expressly deny that the plaintiffs in the securities class action acted as any of them. have claimed any valid claim,” the company said in the filing.
What is the matter about?
According to multiple reports, two former Cognizant executives allegedly sanctioned $3.6 million in bribes to senior government officials through a third-party construction company (L&T, as per reports). The bribe was to get approval for the construction of the IT major’s new campus of 2.7 million square feet KITS in Chennai in 2014. The issue dates back to 2016 when Cognizant first disclosed that it was conducting an internal investigation into what it called “improper payments.” Authorities reportedly named include Gordon Coburn and Steven E. Schwartz.
2016-17: Alleged Bribery – Internal Investigation
Cognizant disclosed in an SEC filing in September 2016 that the company was conducting an internal investigation into “whether certain payments related to facilities in India were improperly made and were subject to potential violations of the US Foreign Corrupt Practices Act (FCPA) and other applicable laws.” were in breach.” It further said that it is cooperating with the US Department of Justice (DOJ) and the United States Securities and Exchange Commission (SEC). Francisco D’Souza was the CEO of the firm at the time.
Coburn, the president and also named in the alleged case, resigned in September 2016.
In 2017, the company reported that approximately $6 million in potentially improper payments had been made between 2009 and 2016.
2019: SEC investigation
An SEC order in February 2019 revealed that the company, through a third-party company, through its employees paid government officials in India $2 in exchange for assistance in securing and obtaining planning permits related to the construction of the facility. million has been authorized.
It said the company would reimburse the third party manufacturing company through invoices and change orders to cover up the bribery. In addition, the officials have also falsified the internal books of account and records of the company, the order said.
Cognizant paid $25 million to the SEC on this charge.
2020: demand for inquiry
In February 2020, a PIL was filed in the Madras High Court to probe the alleged bribery by Cognizant and L&T. According to a report in ET, in June 2021, L&T told the Indian authorities in the US court that it cannot be made a party to the case.
2021: $95 million settlement
The company is now seeking a judge’s approval to settle the bribery charge with alleged shareholders for $9.5 million.
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