Possible violation of the US Foreign Corrupt Practices Act.
Technology solutions company Cognizant announced on Friday that the company was conducting an internal investigation into some allegedly illegal payments made in India.
The investigation is being carried out to know whether some payments made by the company in India violated the US Foreign Corrupt Practices Act.
“The company is conducting an internal investigation into whether certain payments relating to facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act and other applicable laws,” said a Cognizant statement.
“The investigation is being conducted under the oversight of the Audit Committee, with the assistance of outside counsel, and is currently focused on a small number of company-owned facilities,” it added.
The company has voluntarily informed the US Department of Justice and US Securities and Exchange Commission about the suspected payments.
According to the US Foreign Corrupt Practices Act, bribing officials of foreign countries for obtaining or retaining business is illegal.
“The company has voluntarily notified the United States Department of Justice (the “DOJ”) and United States Securities and Exchange Commission (the “SEC”) and is cooperating fully with both agencies,” said the company.
As the investigation is in an early stage, the company said, it could not predict what action the authorities would take and what impact the investigation would have on its operations, and financial position.
Marking the lowest performance in two years, Cognizant shares slumped about 15 percent to $46.71 in early trading on Nasdaq on Friday, reported Mint.
For the second time in a year, Cognizant had cut down its full-year revenue growth forecast to 8.5 – 9.5 percent in August. The company is expecting the worst rate of growth since 1996.
The company also announced the resignation of its president Gordon Coburn who had been with the company since 1996. Announcing the resignation of Coburn, a company spokesperson said it was his decision, but declined to say whether it was in connection with the investigation.
India-born Rajeev Mehta, who was the CEO for IT services at Cognizant, will be the new president.