New Delhi: India’s second largest software services company, Infosys Technologies Ltd, is being investigated by the US department of justice (DoJ) for possible business visa fraud, according to two government officials.

DoJ officials did not disclose the details because the case is still under investigation.

Not only does the investigation open up the possibility of civil or criminal charges being levelled against the company, it could potentially impact Infosys’ ability to service clients in the US.

The company said on Tuesday that it received a subpoena from a grand jury in the US district court for the Eastern District of Texas on 23 May. A subpoena is a directive issued by a court requiring a person or an entity to appear before the court at a specified time.

“The subpoena requires us to provide information to the grand jury regarding our sponsorships for, and uses of, B1 business visas," an Infosys spokesperson said in an email statement. B1 visas are issued for short-term business trips for such purposes as attending business seminars and restricts employees from engaging in gainful employment during their stay.

Although it could not be immediately ascertained from US authorities, the investigation appears to be a direct result of a complaint by a US-based employee of Infosys, Jack Palmer, who filed it in February before a court in Alabama. In his complaint, Palmer alleged that Infosys was “sending lower-level and unskilled foreigners to the United States to work in full-time positions at Infosys’ customer sites in direct violation of immigration laws". Palmer also claimed that Infosys coached employees going to the US on B1 visas on how to pass the immigration interview.

Infosys said it would comply with the grand jury’s proceedings and the investigation.

Pakmer’s lawyer said the charges against the company were criminal in nature.

“A grand jury is a criminal investigative tool used by the state to bring people to justice. This means that either the US attorney’s office or the state department’s investigators have started looking into what’s going on (in the Infosys case). I’m sure the criminal case has come about because of the civil case filed by Mr Palmer—they’re inter-related. We are not involved in the criminal case, but Mr Palmer has agreed to be a witness and assist the prosecutors," said Kenneth J. Mendelsohn, Palmer’s lawyer, over the phone from Alabama.

In April, US senator Charles E. Grassley submitted a letter to secretary of state Hillary Rodham Clinton and secretary of department of homeland security Janet Napolitano seeking an investigation into the use of the visa programme. “I’m very concerned about fraudulent actions that at least one foreign-based company has allegedly been taking in order to get around the requirements and US worker protections of the H-1B visa program, and more generally, about the provisions in current guidance to visa adjudicators that actually authorize such evasion of congressional intent," Grassley, a Republican from Iowa, wrote in the letter, citing the complaint by Palmer against Infosys.

Grassley had also sought detailed statistics regarding the number of B1 visas issued, the employer using them, the total number of B1 visaholders approved each year, and the length of time they stay in the country. He also raised concerns about potential abuse of the “B1 in lieu of H-1B" visas. The H-1B visas are longer-term visas issued to people who work in speciality occupations. The state department is yet to respond to Grassley’s queries.

Earlier this month, Infosys referred to the Palmer case and senator Grassley’s letter in a filing to the US Securities and Exchange Commission (SEC) and admitted that any action on the part of US authorities in this regard could seriously affect its business in the country.

“In the event that the US government undertakes any actions which limit the B1 business visa program or other visa program that we utilize, this could materially and adversely affect our business and results of operations," the company said in the filing.

The company also disclosed in the SEC filing that it has 10,100 persons on H-1B visas and 2,200 employees on L1 visas in the US (excluding Infosys BPO and wholly owned subsidiaries).

According to a Mumbai-based IT research analyst, Tuesday’s development has implications both for the image of the company, which is known for its high governance standards, and for India’s software services industry as a whole. Any change in legislation which makes visa laws stricter will hurt the industry, he added, asking that he not be identified.

“The current issue (subpoena to Infosys) is a company related issue and I hope they provide the right perspectives," said Som Mittal, chairman of the software industry lobby group Nasscom.

“There are interpretation issues on various categories of visas. This has been acknowledged by the US authorities and President Barack Obama himself. Obama has spoken of introducing comprehensive immigration reform in the US. We at Nasscom are working with the embassy in India and administration in the US to ensure there is clarity on this issue," he added.