Cognizant, the Nasdaq listed IT services company with a large presence in India has disclosed that it 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.
Simultaneously, Cognizant also announced the appointment of Rajeev Mehta, who was earlier the chief executive officer – IT services at the company as the new president following the resignation of incumbent Gordon Coburn.
In a regulatory filing with the US SEC, Cognizant said, “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. 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.”
Cognizant said that the internal investigation is in its early stages, and it will not be able to predict what, if any, action may be taken by the DOJ, SEC or any governmental authority in connection with the investigation or the effect of the matter on the company’s results of operations, cash flows or financial position.
Cognizant is one of the fastest growing IT services company from India which recorded a revenue of $12.42 billion for 2015 with a growth rate of 21% and has an employee headcount in excess of 2.3 lakh.
However, for the year 2016, Cognizant revised its revenue guidance lower and guided it to be in the range of $13.47 billion to $13.60 billion translating into a growth of 8.5-9.5%. This guidance is also lower than the guidance of 10-12% provided by Indian IT industry’s trade body – Nasscom.
Cognizant has been one of the stellar performers in the Indian IT industry having overtaken its nearest rivals – Infosys and Wipro in terms of revenue growth. On the appointment of Rajeev Mehta as president, Cognizant CEO Francisco D’Souza said, “Raj is a proven leader with strong client relationships forged over 20 years with the company. For the past decade Raj has been responsible for leading our market-facing teams in delivering industry-leading growth.”
As chief executive officer, IT Services at Cognizant, Rajeev was responsible for market-facing activities across the company as well as for delivery across Cognizant’s IT Services business. His prior roles at Cognizant include group chief executive, Industries & Markets, where he was responsible for leading the industry vertical and geographic market operations on a global basis.