Cognizant Ex-Employee Files Lawsuit Against CEO, Board Members For Bribing Govt Official
The New-Jersey based IT company, Cognizant has yet again been in news about misleading their shareholders, regarding a bribery case.
Why did we mention ‘again’? We shall fill you in regarding all the details of the same shortly.
Before that, let’s start by reporting that a former employee of the IT services provider has sued board members of the company for allegedly misleading shareholders about a bribery case in India.
Former Cognizant Employee Sues Board Members
A common stock owner of the company as well as a former employee of Cognizant, has filed a lawsuit against the current and former board members as well as key executives of the company.
He has alleged these members for issuing false, misleading statements and to have omitted material information about the bribe payments in the company’s public filings, to get approval for the construction of new campus in Chennai.
He filed this lawsuit in the US District Court of Delaware.
We would like to mention here that this lawsuit filed is not the same as the ongoing securities class action lawsuit, filed by shareholders of Cognizant, alleging the company to disclose the bribery case, which misled these shareholders.
Who Does the Petition Name?
As mentioned, this employee sued the current and former board members of the IT major.
- Former CEO and Vice Chairman: Francisco D’Souza,
- Current CEO: Brian Humphries,
- Current CFO: Karen McLoughlin,
- Former President: Gordon Coburn,
- Former Chief Legal Officer: Steven E Schwartz,
- And other board members.
What is the Bribery Case About?
Back in 2014, two senior executives of Cognizant allegedly bribed an Indian government official with $2 million, for issuing a planning permit for construction of its new campus in Chennai.
Following this, the US Securities and Exchanges Commission (SEC) investigated the whole matter between 2014 and 2016.
As per the US agency, Cognizant has paid back the $2 million along with $2.5 million as reimbursement to the contractor, allegedly authorised by these 2 senior executives at Cognizant’s US headquarters.
In fact, Cognizant settled the charges with SEC, paying an interest amount of about $19 million, followed by penalty of $6 million.
The 2 senior execs, along with the former president of Cognizant Gordon Coburn, resigned in 2016.
What Does This Former Employee Suspect?
This lawsuit states that due to their positions as ’employees and/or directors of Cognizant’, the defendants would have been privy to information on the company’s financial prospects and ongoing issues.
He has sought for a jury trial and has asked for improved corporate governance, payment of damages to the company and allowing shareholders to nominate board members.
As per the petition, “The
Individual Defendants (officials and board members) are liable for damages
under Section 10b of the Exchange Act…and, if Cognizant were to be held liable
in the Securities Class Action, the Individual Defendants would be liable to it