As part of the probe, the Securities and Exchange Commission (SEC) has also named an Indian construction company executive as co-conspirator in the 2016 Cognizant bribery case, which the US company settled on 15 February 2019 by agreeing to pay $25 million. New Jersey-based Cognizant used the construction company in India to pay $3.64 million in bribes to secure permits to build the US firm’s three campuses in Chennai and Pune, according to the US probe.
According to CMDA records, the town planning body received an application from L&T on behalf of Cognizant for approval on 2 February 2013. Records shared by SEC’s probe show the “construction company" submitted an application and fee on or about 7 February 2013 for the planning permit (from CMDA).
Although SEC didn’t name the construction company, new evidence from SEC’s probe bolsters the claim that India’s largest engineering company facilitated payments to local government officials at the behest of Cognizant.
“(In April 2014), the construction company advised CC# 1 (Cognizant co-conspirator 1) that it would take the necessary steps to secure and obtain the planning permit, and that it had hired a special third-party consultant to make the bribe payment," said the SEC document.
Over a two-year investigation, SEC found that the department head for commercial buildings at the construction company, one of the co-conspirators, worked with two Chennai-based employees of Cognizant and paid $2 million in bribes to a government official at CMDA for getting the requisite building permits for a campus, according to evidence submitted by SEC in a New Jersey district court on 18 February.
SEC did not disclose the identity of the Indian employee of the construction firm or the two former Cognizant employees, who were based in India. Mint could not immediately identify the Indian resident, who has been named as one of the co-conspirators in the case.
SEC’s attorney, Michael B. Hibbel, declined to comment. However, a person familiar with the case said SEC had not disclosed the name of the construction company in the report because the firm was not being probed, it being outside SEC’s jurisdiction.
Spokespeople for SEC and Cognizant also declined to comment.
Mint’s queries to L&T on 19 February went unanswered. However, in an earlier email to Mint, the company referred to its statement to stock exchanges. The stock exchange filing, while acknowledging that Cognizant is a long-time customer of L&T, said the company was not aware of “any evidence" that supported L&T’s involvement in making the alleged improper payments.
“We confirm that neither we nor any of our employees are a party to the proceedings brought in the United States. We have no further comments to make on this issue," L&T added.
SEC’s exhibits also detail how the construction company’s work progressed while it was building Cognizant’s campus in the Knowledge Industry Township (KIT) in Chennai. That roughly corroborates evidence that L&T was involved in the project.
For example, SEC claims that Cognizant hired the construction company to develop the KIT campus in November 2011. That is the same time when L&T was hired to build the Chennai campus, a Cognizant executive said on condition of anonymity.
According to SEC, the department head for commercial buildings at the construction company, in an email to Cognizant, said L&T would not inform anyone except Cognizant’s senior management about approvals from CMDA on or about 17 May 2014. This implies L&T had got approvals by May of that year. CMDA records show that it gave the go-ahead to L&T in a letter dated 11 March 2014.
According to SEC, the work completion certificate to the construction company was issued by CMDA on or about 5 November 2014. According to CMDA records, it gave a completion certificate in a letter dated 19 February 2015 to L&T.
SEC claims its two-year investigation is based on internal Cognizant documents, including emails of former president Gordon Coburn and former chief legal officer Steven Schwartz, as well as the accounts of multiple cooperating co-conspirators.
“When SEC in its investigation believes a bribe was paid, then someone—be it regulatory authorities, the SFIO (Serious Fraud Investigation Office) or the company’s board—needs to find out who Cognizant paid a bribe to, and the full chain needs to be investigated," said Amit Tandon, founder and managing director at Institutional Investor Advisory Services, a proxy advisory firm.