Synopsis

The lawsuit by Ravindra Guyyala in the US District Court of Delaware follows a separate ongoing securities class action lawsuit filed by Cognizant shareholders, alleging that the company failed to disclose the bribery and misled shareholders.

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In 2019, Cognizant settled the charges with the SEC without admitting or denying the allegations. It agreed to pay disgorgement and prejudgment interest of approximately $19 million and a penalty of $6 million.

MUMBAI: A former employee of IT services provider Cognizant has sued current and former board members as well as key executives for allegedly misleading shareholders about a bribery scandal in India.

The lawsuit by Ravindra Guyyala in the US District Court of Delaware follows a separate ongoing securities class action lawsuit filed by Cognizant shareholders, alleging that the company failed to disclose the bribery and misled shareholders.

The petition names former CEO Francisco D’Souza, current CFO Karen McLoughlin, former president Gordon Coburn, and former chief legal officer Steven E. Schwartz and board members, including current CEO Brian Humphries, as defendants.

Guyyala — a common stock owner of Cognizant and currently based in Little Rock, Arkansas, according to his LinkedIn profile — has alleged that the executives and board members breached duties by issuing false, misleading statements and omitting material information in the company’s public filings about the bribe payments to get approval for the construction of new campus in Chennai.

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Cognizant did not respond to ET’s queries till press time Friday.

In 2014, Cognizant allegedly authorised a contractor to pay a $2 million bribe to a senior government official to issue a planning permit for its new campus in the southern Indian city. The payment, along with a scheme to conceal a $2.5 million reimbursement to the contractor, was authorised by two senior executives at Cognizant’s US headquarters, according to the US Securities and Exchanges Commission (SEC), which investigated the matter between 2014 and 2016.

The executives, including former Cognizant president Gordon Coburn, resigned in 2016.

In 2019, Cognizant settled the charges with the SEC without admitting or denying the allegations. It agreed to pay disgorgement and prejudgment interest of approximately $19 million and a penalty of $6 million.

Guyyala’s lawsuit argues that “due to their positions as employees and/or directors of Cognizant, the Individual Defendants were privy to information regarding the Company’s financial prospects and internal controls and would have been well aware of the ongoing issues at the Company.”

It seeks a jury trial, asking for improved corporate governance, payment of damages to the company and allowing shareholders to nominate board members.

“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 for contribution,” the petition states.

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5 Comments on this Story

http://economictimes.indiatimes.com/

kams31 minutes ago

Bribery and benami assets are part of Indian DNA anywhere in the world

Modi should make it fundamental right of every elected MP,MLA and government employee through a bill in Parliament.

The Bill is only way to make “Ease of doing business in India”. Without that Bill , companies will face delays and accounting issues.

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Gang1 hours ago

Was bribe paid to sun TV dmk gang ???

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Roshan Rodrigues2 hours ago

broke guy.. pilfering up to the profit.. that’s TAT

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