IT services provider Cognizant Technology Solutions Corp said it was conducting an internal investigation into possible violations of the U.S. Foreign Corrupt Practices Act and other laws, sending its shares tumbling on Friday.
US-based software major Cognizant Technology Solutions Corporation on Friday announced an internal investigation under the US Foreign Corrupt Practices Act into certain payments made to facilities in India.
The probe led the company to appoint its IT Services Chief Executive Rajeev Mehta on September 28 as its President, a day after incumbent Gordon Coburn resigned on September 27.
“The investigation is being conducted under the oversight of the audit committee and is focused on a small number of company-owned facilities,” Cognizant said in a regulatory filing with the US Securities and Exchange Commission (SEC).
The company has notified the Justice Department and the SEC and is cooperating with both agencies.
“The internal investigation is in its early stages, and the company is not able to predict what, if any, action may be taken by the Justice Department, SEC or any governmental authority in connection with the investigation or the effect of the matter on the company’s results, cash flows or financial position,” it said in the filing.
Mehta, 49, who has been with the company since 1997, was Chief Executive of its IT Services since December 2013.
“For the past decade, Mehta has been responsible for leading our market-facing teams in delivering industry-leading growth. He has a deep understanding of new technologies and new delivery models and their potential to transform businesses,” said Cognizant Chief Executive Officer Francisco D’Souza in a statement.
As Chief Executive of IT Services, Mehta was responsible for market-facing activities across the company. His prior roles include Group Chief Executive, Industries & Markets, where he led its industry vertical and geographic market operations on a global basis.
“I am honoured to assume this new role at an exciting time in Cognizant’s history. Over the past year, we have designed and introduced a new operating model to support our strategic vision and growth,” said Mehta in the statement.
Co-founded by Indian-origin Kumar Mahadeva and D’Souza two decades ago, the Nasdaq listed $12.4-billion IT major has its largest software development centres in Chennai, Bengaluru and Hyderabad.
In its previous avatar, the company was an IT arm of Dun & Bradstreet Satyam Software in Chennai and was spun off as Cognizant Corporation in 1996 after it bought 24 per cent equity stake of Satyam for $3.4 million. Its headquarters was shifted to the US in 1997.
With about 100 development and delivery centres worldwide and 244,300 employees, Cognizant is ranked among the top performing and fastest growing firms globally.