On February 15, 2019, the Securities and Exchange Commission (the “SEC”) announced that it had settled—on a no-admit, no-deny basis—with Cognizant Technology Solutions Corporation (“Cognizant”) for alleged violations of the Foreign Corrupt Practices Act (the “FCPA”) involving Cognizant’s former president and chief legal officer.[1] The same day, the Department of Justice (the “DOJ”) indicted the two former executives and the SEC filed a civil complaint seeking permanent injunctions, monetary penalties, and officer-and-director bars against them. The DOJ declined to prosecute Cognizant.[2] The DOJ’s declination was in part based on the fact that Cognizant quickly and voluntarily self-reported the conduct, and, as a result of that self-report, the DOJ was able to identify culpable individuals. This settlement reflects the DOJ demonstrating its continued commitment to its FCPA Corporate Enforcement Policy, under which the DOJ has committed to extending significant cooperation credit, up to and including declinations, to companies that provide meaningful assistance to further DOJ investigations. The resolution also reflects the DOJ’s “anti-piling on” policy in action, as the DOJ declination recognized the “adequacy of remedies such as civil or regulatory enforcement actions,” namely Cognizant’s resolution with the SEC, as a factor in declining to prosecute.[3]

According to the SEC, Cognizant authorized an intermediary to pay bribes amounting to approximately $2.5 million to government officials in India in exchange for securing and obtaining a required planning permit in connection with the development of an office park in Tamil Nadu, India, as well as other improper payments in connection with other projects in the country. Cognizant allegedly authorized a third-party construction company to pay the bribes. To conceal the company’s involvement with the bribes, certain Cognizant employees and agents agreed that Cognizant would reimburse the construction company through the issuance of false invoices at the end of the development of the project. As a result, the SEC alleged that Cognizant employees falsified certain internal books and records in connection with the bribery payments. As part of its settlement with the SEC, Cognizant agreed to pay $16,394,351 in disgorgement, $2,773,017 in prejudgment interest, and $6,000,000 in civil money penalties.[4]

Two days earlier, the DOJ had issued a letter discussing its decision to decline prosecution. In its declination letter, the DOJ pointed to a number of factors driving its decision including:

(1) Cognizant’s voluntary self-disclosure of the matters described above within two weeks of the Board learning of the conduct; (2) Cognizant’s thorough and comprehensive investigation; (3) Cognizant’s full and proactive cooperation in the matter (including its provision of all known relevant facts about the conduct) and its agreement to continue to cooperate in the Department’s ongoing investigations and any prosecutions that might result; (4) the nature and seriousness of the offense; (5) the company’s lack of prior criminal history; (6) the existence and effectiveness of the company’s pre-existing compliance program, as well as steps that the company took to enhance its compliance program and internal accounting controls; (7) the company’s full remediation, including but not limited to terminating the employment of, and disciplining, employees and contractors involved in the conduct; (8) the adequacy of remedies such as civil or regulatory enforcement actions, including the Company’s resolution with the SEC and agreement to pay a civil penalty of $6 million and disgorgement; (9) Cognizant’s agreement to disgorge the full amount of its cost savings from the bribery; and (10) the fact that, as a result of the Company’s timely voluntary disclosure, the DOJ was able to conduct an independent investigation and identify individuals with culpability for the corporation’s conduct.

As to this last factor, Gordon Coburn, the company’s former president, and Steven Schwartz, its former chief legal officer, were charged in a 12-count indictment on February 14 by a federal grand jury in New Jersey, including three counts of violating the FCPA.

The SEC’s and DOJ’s resolutions with Cognizant reflect their continued close cooperation in bringing FCPA actions.[5] Similarly, the DOJ letter of declination with Cognizant—the twelfth such letter publicized by the DOJ since it introduced the FCPA cooperation guidelines in November 2017[6]—highlights steps companies should take if they wish to maximize cooperation credit in the FCPA context. While, as the DOJ has repeatedly noted,[7] each case is different and no set of actions can guarantee a declination, the DOJ’s guidelines offer clear steps—including rapid and voluntary self-reporting and fully cooperating with the DOJ, including against individuals—that companies can take from the outset of an investigation to help maximize cooperation credit. Companies should, of course, be cognizant that once a decision to self-report and/or cooperate is made, cooperation will need to be full and forthcoming in order to potentially receive maximum cooperation credit.

In addition, this resolution highlights the DOJ’s “anti-piling-on” policy, under which the DOJ has announced that it aims to “discourage disproportionate enforcement of corruption laws by multiple authorities.”[8] Here, the DOJ explicitly noted the adequacy of civil enforcement remedies in declining to prosecute and credited the disgorgement amount Cognizant agreed to pay under the SEC resolution. The DOJ’s coordination with other enforcement agencies, including the SEC, in imposing penalties relating to the same conduct is expected to continue and provides opportunities for companies to negotiate potentially better outcomes in multi-agency (and multi-national) investigations.


[1] https://www.sec.gov/news/press-release/2019-12

[2] https://www.justice.gov/criminal-fraud/file/1132666/download

[3] See Deputy Attorney General Rod Rosenstein Delivers Remarks to the New York City Bar White Collar Crime Institute (May 9, 2018), available at https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar.

[4] https://www.sec.gov/litigation/admin/2019/34-85149.pdf

[5] For further discussion of recent FCPA developments see Breon S. Peace, Jennifer Kennedy Park, and Alex Janghorbani, Recent Settlement Highlights Cooperation Parameters Under the Department of Justice’s FCPA Corporate Enforcement Policy (July 6, 2018), available at https://www.clearyenforcementwatch.com/2018/07/recent-settlement-highlights-cooperation-parameters-department-justices-fcpa-corporate-enforcement-policy/.

[6] https://www.justice.gov/criminal-fraud/corporate-enforcement-policy/declinations; https://www.justice.gov/criminal-fraud/file/838416/download; https://www.clearyenforcementwatch.com/2018/09/sanofi-settles-fcpa-charges-sec-25-2-million/

[7] https://www.justice.gov/opa/speech/deputy-attorney-general-rod-j-rosenstein-delivers-remarks-american-conference-institute-0

[8] See Deputy Attorney General Rod Rosenstein Delivers Remarks to the New York City Bar White Collar Crime Institute (May 9, 2018), available at https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar.