Ravindra Guyyala, a former employee of Cognizant, had recently filed a lawsuit against the current and former board members of the multinational IT company, as well as its primary executives. He had alleged that they had issued misleading statements and concealed significant information about the bribes paid by Cognizant in order to obtain approval for the construction of its new campus in Chennai. However, a week later, as per a court notice, Guyyala has “voluntarily dismissed” all his claims “without prejudice”.
Apparently, in 2014, two senior executives had been accused by Guyyala of paying US$2 million to a government official in India to obtain a planning permit to construct its new campus in Chennai. The matter was then thoroughly investigated by the US Securities and Exchanges Commission (SEC) over a period of two years. It then came to light that Cognizant had repaid the $2 million along with $2.5 million as reimbursement to the contractor, and the same was authorised by the two senior executives named in the lawsuit, from the Company’s US headquarters.
The petition had named Francisco D’Souza, former CEO; Karen McLoughlin, current CFO; Gordon Coburn, former president, and Steven E. Schwartz, former chief legal officer, along with board members, including Brian Humphries, CEO, as offenders.
In the lawsuit, Guyyala had accused the aforementioned of breaching their duties by issuing false and misleading statements and purposefully hiding material information pertaining to the bribe, in the Company’s public filings.
In 2019, however, Cognizant had settled the charges with the SEC without either denying the allegations or admitting to the same. It had agreed to pay about $19 million as disgorgement and prejudgment interest along with a penalty of $6 million.