Cognizant Investigating Indian Payments -- Update
September 30 2016 - 11:38AM
Dow Jones News
By Austen Hufford
Cognizant Technology Solutions Corp. said it was conducting a
probe into whether payments in India violated a federal
anti-foreign-corruption act, and that its president had
resigned.
Shares dropped 16% to $46.02 in morning trading on the news.
The company said Friday that it notified the Justice Department
and the U.S. Securities and Exchange Commission that it was
conducting an internal investigation into whether payments relating
to facilities in India were made improperly and possibly violated
the U.S. Foreign Corrupt Practices Act.
The information-technology provider also said in the same filing
that President Gordon Coburn resigned and would be replaced by Raj
Mehta, who had been the chief executive for IT services. No reason
was given for Mr. Coburn's resignation, and the company didn't
immediately respond to requests for comment on whether the
resignation was related to the investigation.
While the investigation is in its early stages, the board's
audit committee and outside lawyers are focusing it on a "small
number of company-owned facilities."
At the end of 2015, the company had 162,500 employees, or nearly
three-quarters of its workforce, in India across 45 locations with
22.6 million square feet.
Cognizant Technology helps companies outsource their information
technology and other business processes.
In April, the Justice Department rolled out a new program that
offers deep discounts for companies that cooperate with the
government on foreign corruption violations as a way to crack down
on individuals and unearth bribery violations.
In an annual filing, the company said violating anticorruption
laws could subject it to criminal or civil penalties and could
potentially disqualify them from government contracting or
contracting with private companies in highly regulated
industries.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
September 30, 2016 11:23 ET (15:23 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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