Major Allegations Against L&T: Former Chairman Asked to Testify
In a significant development for India’s top construction company, Larsen & Toubro (L&T), allegations of bribery have surfaced, particularly regarding a shady contract acquisition. The spotlight is on Cognizant, a renowned IT company, as the controversy escalates and reaches the United States court system. This article delves into the details of the Cognizant scandal, revealing how top executives are now embroiled in serious legal ramifications.
Background of the Case
Larsen & Toubro, one of India’s largest engineering and construction firms, is under scrutiny due to allegations linked to Cognizant Technologies. The claims assert that Cognizant allegedly paid bribes totaling $770,000 via L&T to secure necessary governmental clearances for a campus project near Pune during the years 2013-2014. These payments were purportedly aimed at facilitating environmental and regulatory approvals essential for the project’s progression.
Legal Proceedings in the US
Following the emergence of these accusations, the case has escalated to the courts in the United States. The U.S. government has summoned former L&T chairman S.N. Subramanyam to testify regarding these allegations about potential illegal payments made to Indian authorities through Cognizant. Several other key personnel, including four additional L&T employees and two ex-Cognizant employees, have also been called upon to provide evidence in this matter.
Key Findings and Reports
According to reports, the Ministry of Home Affairs of India rejected a request from the U.S. Department of State in March 2023 to assist in the investigation. Consequently, the U.S. Justice Department sought help under the Mutual Legal Assistance Treaty (MLAT), filed in January, revealing that Cognizant’s former Chief Operating Officer, Gordon Coburn, indicated in July’s court filing that some payments made in India could have violated the U.S. Foreign Corrupt Practices Act (FCPA).
Connection to Pune and Chennai
This bribery case is closely related to Cognizant’s campuses in Pune and Chennai, resulting in legal actions in both India and the United States. The accusations mention that Cognizant’s alleged payments aimed to expedite the acquisition of governmental permits necessary for their operations.
Whistleblowers and Investigations
The whistleblower in this case is Preetpal Singh, an environmental activist and retired police officer from Delhi, who reported the ongoing SEC investigation into Cognizant’s parent company in the U.S. The scandal initially came to light in 2016 amidst an audit, and the Pune Sessions Court later instructed the Anti-Corruption Bureau (ACB) of Maharashtra to investigate the claims.
Responses from L&T and Inquiries by ACB
L&T has reportedly suggested that making bribe payments was a necessity for obtaining permits. The ACB has based its investigation largely on documents from the SEC that link several company officials, including former Vice President M. Ramamurthi, and government officials to the corruption charges.
Upcoming Court Hearings and Delays
In another related case, accusations have been made against Coburn and former legal officer Steven Schwartz for allegedly bribing officials with $2.5 million to obtain permits for a new campus in Chennai. A hearing was set to start on October 3, 2023, in New Jersey; however, delays have occurred due to the unavailability of a key witness, Ramamurthi, whose passport has been confiscated by the Enforcement Directorate (ED) in India.
Current Legal Status
The Bombay High Court has recently imposed a stay on the ACB’s complaint in the Pune case, while the Chennai hearing is still ongoing. This complex web of legal proceedings showcases the intricate connections between corporate practices and legal enforcement in both India and the U.S., underlining the importance of transparency and ethical conduct in corporate governance.
