Global tech services company Cognizant Technology Solutions Corp., based in New Jersey, has agreed to pay a $25 million civil penalty to settle allegations that it violated the Foreign Corrupt Practices Act, the U.S. Securities and Exchange Commission and federal prosecutors in New Jersey announced.
The Teaneck-based Fortune 200 company’s former chief legal officer, Steven Schwartz, and its ex-president, Gordon Coburn, now face criminal charges for allegedly authorizing a building contractor to pay more than $3.6 million in bribes to a government official in India. The alleged payments were for a permit to build a 2.7 million-square-foot campus in Chennai, India.
Coburn, 55, and Schwartz, 51, also are accused of altering change order requests in an attempt to hide the illicit payments.
Cognizant vice chairman and CEO Francisco D’Souza noted in a Feb. 15 written statement that the company, which did not admit wrongdoing as part of the settlement, had “voluntarily and promptly notified U.S. authorities of the potential issues in India more than two years ago, and cooperated extensively with their investigations.”
“We undertook a comprehensive internal investigation under the oversight of the audit committee of the board of directors, with the assistance of outside counsel,” he added. “We have also made further enhancements to our compliance processes, procedures and resources. 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.”
D’Souza did not directly address the 12-count indictment charging Coburn and Schwartz with one count of conspiracy to violate the FCPA, three counts of violating the FCPA, seven counts of falsifying books and records, and one count of circumventing and failing to implement internal accounting controls.
“The allegations in the indictment … describe a sophisticated international bribery scheme authorized and concealed by C-suite executives of a publicly-traded multinational company,” said Brian Benczkowski, assistant attorney general for the Justice Department’s Criminal Division and a former partner at Kirkland & Ellis.
U.S. Attorney Craig Carpenito of the District of New Jersey said in a statement: “Corruption, bribery, and kickbacks have no rightful place in American business, and corporate officials who bribe foreign officials to gain a competitive advantage are breaking U.S. law. As this indictment shows, we will investigate and prosecute those who would misuse their privileged positions as senior corporate executives to offer and pay bribes, and then conceal their misconduct from investors, so that we can help to restore public trust in a market that is fair and open for all.”
Schwartz served as Cognizant’s CLO, chief corporate affairs officer and executive vice president from 2001 to October 2016, according to his LinkedIn profile. The alleged bribery scheme occurred in 2014. After leaving Cognizant, Schwartz served as general counsel for Consumer Reports from January 2017 to February 2018. Consumer Reports announced in June 2018 that it had hired a new GC.
Coburn joined Cognizant in 1998 as its chief financial officer and served as president from 2012 to September 2016, according to his LinkedIn profile.
Attempts to speak with Coburn and Schwartz were not immediately successful.