Cognizant said it was conducting an internal investigation into whether certain payments relating to its facilities in India violated the US Foreign Corrupt Practices Act and that it had voluntarily notified the US Department of Justice and the US Securities and Exchange Commission.
The US Foreign Corrupt Practices Act makes it illegal for companies to bribe officials in foreign countries. The law is enforced by the US Department of Justice and US SEC and the punishments are severe. However, voluntary disclosure of violations limits the severity of the fines that are imposed.
“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,” Cognizant said in a filing with the SEC. Cognizant’s shares were down 10% in early trade on Nasdaq.
Cognizant said the internal investigation is in its early stages and that it is not able to predict what action may be taken by the DOJ, or the SEC.
It added that it could not predict the impact of the investigation the company’s operations, cash flows or financial position.
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