US Security and Exchange Commission fines Cognizant $25 million &
charges 2 former top Executives in India bribery case
Why is Cognizant considered to be an Indian company?

Washington D.C., Feb. 15, 2019
NRIpress.com/Ramesh/ A.Gary Singh

US Securities and Exchange Commission and Foreign Corrupt Practices Act (FCPA), fines Cognizant $25 million and also criminal charges against two former top Cognizant Technology Solutions Corp executives for their roles in a bribery scheme in India.

NRI Founder’s Company Cognizant Technology Solutions Corporation has agreed to pay $25 million to settle charges.

• In 2014, a senior government official of the Indian state of Tamil Nadu demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million square foot campus in Chennai, India. 
• Cognizant’s President Gordon Coburn and Chief Legal Officer Steven E. Schwartz authorized the contractor to pay the bribe, and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders. 
• The SEC also alleges that Cognizant authorized the construction firm to make two additional bribes totaling more than $1.6 million.  Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm.

US Securities and Exchange Commission, SEC charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.  The SEC is seeking permanent injunctions, monetary penalties, and officer-and-director bars against Coburn and Schwartz.

Violation of the H-1B

• In 2009, an investigation by the US Department of Labor (DoL) found Cognizant in violation of the H-1B provisions of the Immigration and Nationality Administrative Act.
• Cognizant had achieved 99.7% compliance in its management of H-1B visa-related issues. The company paid US$509,607 in back wages to the 67 employees. No fines or visa restrictions were imposed, since DoL did not discover any willful violations.

Walt Disney World Case:

• In 2016, the company was the subject of a lawsuit by workers for Walt Disney World who said workers from India were brought into the United States on H-1B visas in order to replace them. The United States District Court in Orlando dismissed the lawsuits, stating "none of the allegedly false statements put at issue in the complaint are adequate.

Discrimination Case:

• In 2018 a race discrimination suit was brought: "Three former employees claim they were forced out of their jobs and replaced with 'less qualified' Indians after being poorly treated by their Indian supervisors and colleagues, given unjustifiably low performance ratings and denied promotions." Cognizant said it was "national origin" and not race.

Senior Management Massive Layoff Cases

• 200 Senior Executives, above the Director's Level were dismissed because they were not able to catch up with the latest technologies. The number of the executives that were dismissed is significantly big and questions the ability of the company to catch up with the latest technologies.

Irish Case:

In 2018, The Irish contract employee expressed concerns about the conditions of employment in relationship to compensation and basic employment allowances like sick leave.

Corruption probe in India

Rajeev Mehta took over to deal with Foreign Corrupt Practices Act, and carrying out its own probe to determine whether some payments made in India breached the law

2017 Hyderabad Lay Offs & forced Employee to resign

• Eight employees filed petitions with the labor department, complaining Cognizant forced them to resign as part of a performance-based review. The labor department closed the case in favor of employees
• 6000 Cognizant employees in Hyderabad lost their job as a part of company's annual performance review process

Cognizant failed to pay the tax of more than 385 million in the 2016-17 In India
India tax department freezes certain Cognizant bank accounts

October 19, 2017. REUTERS/Chris Helgren --(Reuters) - India’s Income Tax department has frozen Cognizant Technology Solutions Corp’s bank accounts and deposits in Chennai and Mumbai for allegedly evading a dividend distribution tax (DDT), according to a report on Tuesday.
A Cognizant spokesman confirmed the report and said in a statement that a court has instructed the tax department not to take further action pending further hearings.
Cognizant failed to pay the tax of more than 25 billion rupees ($385 million) in the 2016-17 financial year, the Hindu newspaper reported, citing officials from the tax

Cognizant founded as an in-house technology unit of Dun & Bradstreet in 1994:

Cognizant’s is headquartered in Teaneck, New Jersey, provides IT services, including digital, technology, consulting, and operations services. It is also one of the fastest growing Fortune 500 companies. It was founded as an in-house technology unit of Dun & Bradstreet in 1994, and started serving external clients in 1996.

• Dun & Bradstreet: For nearly two centuries, Dun & Bradstreet has helped customers and partners accelerate growth and improve performance through the power of data and analytics. Our nearly 5,000 employees around the world

Y2K and dot-com boom of the late 1990s:

• Cognizant had a period of fast growth during the 2000s, becoming a Fortune 500 company in 2011.
• In 2017, Cognizant was named in Fortune's Future 50 list.

Cognizant began as Dun & Bradstreet Satyam Software (DBSS), established large-scale IT projects for Dun & Bradstreet businesses.

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 Kumar Mahadeva is the Sri Lankan American founder, and original chairman and chief executive officer of, Cognizant Technology Solutions. He was the CEO of Cognizant from 1994 to 2003 and was succeeded

• In 1996, the company started pursuing customers beyond Dun & Bradstreet. Dun & Bradstreet spun off several of its subsidiaries including Erisco, IMS International, Nielsen Media Research, Pilot Software, Strategic Technologies and DBSS, to form a new company called Cognizant Corporation.
• in 1997, DBSS renamed itself to Cognizant Technology Solutions.
• In July 1997, Dun & Bradstreet bought Satyam's 24% stake in DBSS for $3.4 million
• In June 1998, the company raised $34 million, less than what the IMS Health underwriters had hoped for.
• Cognizant's revenues in 2002 were $229 million, and the company had zero debt with $100 million in the bank
• During the dotcom bust, the company grew by taking on the maintenance projects that larger IT services companies did not want

In 2003, IMS Health sold its entire 56% stake in Cognizant and

• In 2003, Kumar Mahadeva resigned as the CEO and was replaced by Lakshmi Narayanan
• In 2006, Lakshmi Narayanan was succeeded by the Kenya-born Francisco D'Souza
• In September 2014, Cognizant struck its biggest deal, acquiring healthcare IT services provider TriZetto Corp for $2.7 billion
• The company has more than 261,400 employees globally, of which over 150,000 are in India across 10 locations with a plurality in Chenna

Cognizant is among the largest recruiters of MBAs in the industry; they are involved in business development and business analysis for IT services projects
The company focus on specific industries such as Banking & Financial Services, Insurance, Healthcare, Manufacturing and Retail.
The horizontals focus on specific technologies or process areas such as Analytics, mobile computing, BPO and Testing.
Revenues is derived from clients in the Financial Services (40%), healthcare (30%) industries and others include clients from Manufacturing, Retail & Logistics, Communications, Information, Media & Entertainment and , By geography, most of the revenue is derived from North America (79%) and Europe (16%).

"We are pleased to reach these resolutions with the U.S. Department of Justice and the U.S. Securities and Exchange Commission. With today's announcements, we've taken a major step forward in putting this behind us," said Francisco D'Souza, vice chairman and CEO of Cognizant, in a statement. "Further, we are gratified that both the DOJ and SEC recognized that we voluntarily and promptly notified U.S. authorities of the potential issues in India more than two years ago, and cooperated extensively with their investigations."

Why is Cognizant considered to be an Indian company?

Now Cognizant is led by Francisco D'Souza (CEO), Rajeev Mehta (President) and Karen McLoughlin (CFO). Others in the Executive Leadership team include Malcolm Frank, Ramakrishnan Chandrasekaran (Chandra), Srinivasan Veeraraghavachary, Debashis Chatterjee (DC), Ramakrishna Prasad Chintamaneni.
Effective from April 1, 2019, current CEO will be replaced by Brian Humphries and Francisco D'Souza will remain as the executive vice chairman of Cognizant

Francisco D'Souza

Kenyan-born NRI Francisco D'Souza: co-founded Cognizant in 1994 and has served as the company’s CEO since 2007, leading revenue growth from $2.1 billion that year to $14.8 billion in 2017. Currently the CEO and Vice Chairman of Cognizant a Fortune 200 global professional services company — co-founded the NASDAQ-100 company in 1994 He succeeded Lakshmi Narayanan as the CEO in 2007 In 2018, he was appointed Vice Chairman, while continuing his role as the CEO till 1st April, 2019 He is son of Indian Foreign Services officer Placido D'Souza and Sushila He got Bachelor of Business Administration from University of East Asia Macau and a Master of Business Administration from Carnegie Mellon University

Over 70% of the employees are based in India. Even the new president of the company is Rajeev Maheta based in Chennai

Rajeev Mehta (President)

Raj joined Cognizant in 1997 and has consistently contributed to our industry-leading growth. Prior to his current role Raj served as Chief Executive, IT Services, leading industry, geographic and delivery operations on a global basis to provide excellence through process and quality initiatives. He also served as COO of Cognizant’s Global Client Services and Senior Vice President and General Manager of Cognizant’s Banking & Financial Services, two of our largest businesses, with full profit and loss responsibility. Earlier in his tenure Raj was responsible for establishing the U.S. Central Region, securing early relationships with some of Cognizant’s largest clients. Raj holds a Bachelor's degree from the University of Maryland and an MBA degree from Carnegie Mellon University. He is a 2011 recipient of the Distinguished Alumni Award from Carnegie Mellon University.