Cognizant finds ‘improper payments’ of $5 million made in India

Cognizant CEO Francisco D’Souza said it was found that certain members of senior management may have been aware of or participated in the matters under investigation


Cognizant began conducting the investigation in September. Photo: Madhu Kapparath/Mint
Cognizant began conducting the investigation in September. Photo: Madhu Kapparath/Mint

Bengaluru: Cognizant Technology Solutions Corp. said on Monday that an internal probe had found $5 million in payments relating to facilities in India that may have been improper.

“During the three months ended September 30, 2016, we recorded an out-of-period correction related to $3.1 million of such payments that were previously capitalized that should have been expensed. The remaining $1.9 million of such payments remains under investigation,” the company said in a statement.

The statement was an update on a probe it announced in October to determine whether certain payments relating to its facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act and other applicable laws (bit.ly/2d17tdl).

Cognizant also acknowledged that starting in January, it did “not maintain an effective control environment”, as certain senior executives may have “participated in or failed to take action to prevent the making of potentially improper payments by either overriding or failing to enforce the controls established by the company relating to real estate and procurement principally in connection with permits for certain facilities in India”.

“Based on the results of the investigation to date, the members of senior management who may have participated in or failed to take action to prevent the making of the identified potentially improper payments are no longer with the company or in a senior management position,” the company said.

In October, Cognizant announced the departure of its president Gordon Coburn, whom the company replaced with India-born Rajeev Mehta.

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