The Many Issues To Consider From The Cognizant Technology Enforcement Action
Previous posts here and here highlighted the recent Foreign Corrupt Practices Act enforcement action against Cognizant Technology Solutions and two of its former executives.
This post continues the analysis by highlighting several issues to consider.
Timeline
As highlighted in this prior post, Cognizant disclosed its FCPA scrutiny in a September 2016 SEC filing. Thus from start to finish, Cognizant’s FCPA scrutiny lasted approximately 2.5 years. While 2.5 years is shorter than recent medians of over 4 years (see here), 2.5 years is still too long for FCPA scrutiny to last.
Cognizant Technology Solutions Resolves $25 Million SEC Enforcement Action In Connection With Various Licenses And Permits In India
This previous post highlighted the DOJ and SEC’s individual enforcement action against Gordon Coburn and Steven Schwartz (former executives of Cognizant Technology Solutions) in connection with a planning permit in India.
This post highlights the SEC’s enforcement action (as well as the DOJ’s so-called declination letter) against the company based on the same core conduct in which the company, without admitting or denying the SEC’s findings, agreed to pay approximately $25 million in disgorgement and prejudgement interest.
Former Cognizant Technology Solutions Executives Criminally And Civilly Charged In Connection With Indian Planning Permit – Company Resolves $25 Million SEC Enforcement Action
In this 2016 post highlighting Cognizant Technology Solutions’s disclosure of Foreign Corrupt Practices Act scrutiny it was also noted that Gordon Coburn resigned from his position as President of Cognizant Technology Solutions. This follow-up post noted that the two disclosures were likely related.
Sure enough as today the DOJ announced that Coburn and Steven Schwartz (Executive Vice President, Chief Legal and Corporate Affairs Officer) were criminally charged with FCPA violations. If the defendants choose to put the DOJ/SEC to its burden of proof, disputed issues will likely focus on corrupt intent, obtain or retain business and the facilitating payments exception.
Beam Pours $8.2 Million Into The Treasury And Becomes The Latest Alcoholic Beverage Company To Resolve An FCPA Enforcement Action Based On India Conduct
First it was alcoholic beverage company Diageo based on conduct in India and elsewhere (see here).
Then it was alcoholic beverage company ABInBev based on conduct in India (see here).
Yesterday, the SEC announced yet another Foreign Corrupt Practices Act enforcement action against an alcoholic beverage company for conduct in India.
This time it was Beam Inc. (now known as Beam Suntory Inc.) which up until April 2014 had shares traded on the New York Stock Exchange until Suntory Holdings Limited (a Japanese company) acquired Beam which thereafter delisted from the NYSE.
Canada-Based Kinross Gold Corp. Resolves Approximate $1 Million SEC Action Because Its Acquired Indirect African Subsidiaries Had Deficient Internal Controls
Silly you for believing certain commentator hype that the Trump SEC would stop enforcing the Foreign Corrupt Practices Act or for thinking that the general lull in SEC corporate enforcement during the fourth quarter of 2017 meant anything.
In the second SEC corporate FCPA enforcement action in the last 2.5 weeks (see here for the prior Elbit Imaging action), the SEC announced yesterday that Canada-based Kinross Gold Corporation (a company with shares traded on the New York Stock Exchange) resolved an enforcement action “arising from the company’s repeated failure to implement adequate accounting controls of two African subsidiaries.” Without admitting or denying the SEC’s finding in this administrative order, Kinross agreed to, among other things, pay a $950,000 civil penalty.