Cognizant Discloses Corruption Probe; President Resigns
Cognizant Technology Solutions (CTSH) President Gordon Coburn has resigned amid an internal corruption probe at the IT services provider.
In an SEC filing, Cognizant today disclosed:
The Company is conducting an internal investigation into whether certain payments relating to facilities in India were made improperly and in possible violation of the U.S. Foreign Corrupt Practices Act and other applicable laws. 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.
As part of the investigation, Cognizant voluntarily notified the United States Department of Justice and the SEC.
Cognizant’s stock fell about 14 percent to $47.29 amid today’s disclosure. The decrease wiped out roughly $5 billion in market value. Still, Cognizant says the company is not able to predict the potential financial impact of the probe.
Gordon Coburn resigned as president on September 28, and the company’s board moved Rajeev Mehta into that slot. Mehta has been with Cognizant since 1997. In his most recent position as Chief Executive Officer, IT Services since December 2013, he was responsible for market-facing activities across the Company as well as for delivery across Cognizant’s IT Services business.
Cognizant in August said Q2 revenue was $3.37 billion, up 9.2 percent from Q2 2016.