New Delhi: On behalf of Cognizant Technology Solutions, Larsen & Toubro Ltd (L&T), India’s biggest engineering group, assisted in the payment of US$ 3.64 million in bribes to government officials to acquire permits, varying from environmental clearance to power at the US-based tech giant’s campuses in Chennai and Pune, a source said. Cognizant agreed to pay US$25 million on Friday to settle charges it violated under the Foreign Corrupt Practices Act (FCPA), said the US Securities and Exchange Commission (SEC).
In the three years to 2015, L&T facilitated the bribes to government officials in Maharashtra and Tamil Nadu, sources said on condition of anonymity.
Compensation disguised for cost overruns
Even as the US SEC did not name L&T in the complaint, the company’s construction arm made illicit payments and Cognizant reimbursed the money by disguising it as compensation for cost overruns, the sources added.
“One can view these payments as cost of doing business in India,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research. “The larger question that begs to be asked is what is the government doing and how successful it has been as India looks to make it easy for companies to do business in the country.”
The US Attorney’s Office for the District of New Jersey and the US Department of Justice (DoJ) charged former Cognizant president Gordon Coburn and former chief legal officer Steven Schwartz for the illegal payments on Friday.
For the issuance of a planning permit for its Chennai campus in Knowledge Industry Township, Cognizant India in 2014 instructed L&T to pay US$2 million in bribes to a top government official, as per the SEC probe. Cognizant India in 2013 also asked L&T to pay a government official US$7,70,000 in bribes in Maharashtra for seeking environmental clearance for a campus in Pune.