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Cognizant widens bribery probe

Last updated on: October 04, 2016 18:40 IST

The company owns 12 of 45 facilities it has in India and around 75 per cent of its global headcount of 2,44,300 is based in the country

Cognizant Technology Solutions has widened its investigation into bribery charges involving facilities in India.

Sources said more company executives based in India were likely to be probed over certain payments.

Cognizant said the investigation was focused on a small number of improper payments like building licences and permits at its company-owned facilities in India.

The company owns 12 of 45 facilities it has in India and around 75 per cent of its global headcount of 2,44,300 is based in the country.

In choppy waters
Sources said more company executives based in India were likely to be probed over certain payments
Friday’s announcement of investigations and the sudden exit of Cognizant President Gordon Coburn took investors by surprise
The company’s stock dropped 13.5 per cent and investors lost $ 4.5 billion in a day

US-based Cognizant has an offshore model alike those of Indian IT service providers TCS and Infosys. The company reported $ 12.42 billion revenue in 2015 and is second only to TCS with $ 16.54 billion.

Friday’s announcement of the investigations and the sudden exit of Cognizant president Gordon Coburn took investors by surprise. The company’s stock dropped 13.5 per cent and investors lost $ 4.5 billion in a day.

The company informed the US Securities and Exchange Commission (SEC) that it was examining whether certain payments relating to facilities in India were made improperly and in violation of the US Foreign Corrupt Practices Act.

Sources said lawyers from a US firm visited Chennai recently to look into some of the deals. “As the investigation is ongoing, we cannot go into any other details,” Cognizant said in an e-mail response.

The company has notified the US Department of Justice and the SEC and is cooperating with both agencies. Cognizant did not indicate what, if any, action could be taken by the US authorities or their effect on the company's financial position.

Photograph: PTI Photo

T E Narasimhan & Gireesh Babu in Chennai
Source: source
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