Cognizant: The Permit Payment Behind the Construction Bill

In the Cognizant FCPA case, the technology services company agreed to pay $25 million to settle charges brought by the Securities and Exchange Commission over alleged permit bribery in India concealed through construction bills. The alleged arrangement gave a contractor two jobs: obtain the government approval and make the reimbursement look like a project expense. For someone who knows what the contractor actually built, the difference between the work and the bill can explain the payment.

The company’s resolution and the former executives’ cases under the Foreign Corrupt Practices Act followed different paths. In February 2019, the Justice Department declined to prosecute Cognizant while announcing criminal charges against its former president and chief legal officer. The commission settled with the company and brought its own civil case against those executives.

A Government Permit Inside an IT Services Business

The alleged payment bought permission to complete an office campus in Chennai, India. The Securities and Exchange Commission alleged that a senior official in Tamil Nadu demanded $2 million from the construction firm building the campus in 2014. The agency alleged that Cognizant’s president and chief legal officer authorized the contractor to pay and directed subordinates to doctor change orders to conceal the reimbursement.

Cognizant’s business helps explain why that permit mattered. Its annual report for 2018 described consulting, application development, systems integration and business process services delivered through teams at customer locations and dedicated delivery centers. India housed more than two-thirds of its delivery-center space. A campus was part of the infrastructure used to serve customers, and a permit could control when that infrastructure became available.

The Justice Department’s account of the criminal indictment alleged that the contractor secured the necessary government order in late June 2014. Prosecutors alleged that the approval allowed Cognizant to complete the campus and avoid millions of dollars in costs. The business advantage alleged here was getting the facility ready for use, with the contractor handling the official-facing payment. That puts permit bribery inside a company whose customers were buying technology services.

How the Payment Became a Cost Overrun

The criminal indictment alleged a reimbursement planned before the contractor obtained the permit. As described in the Justice Department’s announcement, the former executives and others allegedly agreed that the construction company would make the payment and Cognizant would repay it through phony invoices at the end of the project. The contractor already had a reason to send invoices to Cognizant, giving the alleged reimbursement an ordinary-looking home.

The indictment also charged that, months later, the participants caused Cognizant to reimburse the contractor through payments described as campus cost overruns. The reimbursement was allegedly spread among line items in a construction change order request. Those entries mattered because each appeared to explain part of a construction bill while collectively concealing the payment’s purpose.

The commission also alleged that Cognizant authorized the construction company to make two additional bribes totaling more than $1.6 million and used sham change order requests to conceal reimbursements. The common feature was the contractor’s bill: an official received the alleged bribe, while the company’s paperwork described money owed for the project.

We find it hard to call that a cost overrun when the alleged plan came before the contractor obtained the permit. An insider who knows why a line item appeared, who requested it and what work stood behind it can connect the contractor’s invoice to the decision it was meant to hide.

What the Project Records Can Show

The useful FCPA whistleblower evidence connects the government decision, the contractor’s payment and the company’s reimbursement. The Cognizant allegations identify those links with unusual clarity: authorization by senior executives, an intermediary that obtained the permit, later invoices and a change order carrying the reimbursement. The people who know those stages may sit in different parts of the business.

A project employee may understand the work that a change order purports to cover. Someone at the contractor may know why the payment was requested and what the company agreed to reimburse. A finance employee may understand who approved the payment and how the description entered the accounts. These are different views of the same transaction, and the value lies in connecting them.

The alleged arrangement separated the permit payment from the later reimbursement. A person who heard the earlier authorization could explain why those later entries existed. The commission alleged that senior executives directed subordinates to alter the contractor’s change orders, making the approval chain part of the concealment. For someone inside finance or project administration, knowing who supplied the description can matter as much as knowing who signed off on the bill.

When a Project Expense Enters the Company’s Books

Cognizant’s own disclosure adds an accounting detail beyond the enforcement announcements. In its annual report, the company said it recorded corrections in 2016 relating to $4 million in potentially improper payments made between 2009 and 2016. It described those payments as having been capitalized when they should have been expensed, placing the accounting treatment of facilities payments inside the investigation. That makes a facilities payment worth following beyond the invoice into the company’s accounting entries.

The company said its internal investigation focused on payments relating to company-owned facilities in India. It reported completing that investigation in February 2019 under the audit committee’s oversight.

A 2022 review in the Journal of Forensic and Investigative Accounting, How to Avoid Inadvertently Violating the Foreign Corrupt Business Practices Act Abroad, emphasizes the prominence of third-party payments in FCPA proceedings and the separate importance of accurate records and accounting controls. Applied to the Cognizant allegations, the connection is concrete. The contractor allegedly made the permit payment, and the reimbursement then passed through the company’s own approval and recording process. That is the point at which books, records and internal controls become evidence of how a payment was presented inside the business.

Why the Justice Department Declined to Prosecute Cognizant

The Justice Department credited Cognizant’s prompt voluntary disclosure, cooperation and remediation when it announced its decision not to prosecute the company. Its announcement also identified the return of cost savings from the alleged scheme as a factor. The same announcement described the indictment of the former president and chief legal officer, making the different treatment of the company and its executives explicit from the outset.

The Securities and Exchange Commission’s separate corporate settlement covered anti-bribery, books-and-records and internal accounting controls charges. Its announcement specified about $19 million to return financial benefits and pay interest.

The Investigation Bill Was Bigger Than the SEC Penalty

Cognizant agreed to a $6 million SEC civil penalty. Its annual report disclosed $36 million in costs during 2017 alone for the investigations and related legal matters. The company’s own expense disclosure puts the civil penalty beside a much larger bill for dealing with the consequences.

We find that comparison more revealing than the settlement headline by itself. The civil penalty was smaller than the expense of investigating and dealing with the matter in that single year.

What Happened to the Former Executives’ Cases?

The former executives’ criminal case was dismissed on April 3, 2025. The Securities and Exchange Commission announced on July 15, 2025 that it had agreed with the executives to drop its separate civil case for good. The agency said that decision rested on policy, rather than an assessment of the allegations’ merits. These outcomes concerned the former executives, separately from Cognizant’s earlier settlement.

A Familiar Expense Description Can Hide an Official’s Payment

The SEC’s order in the Fresenius Medical Care case described transactions falsely recorded as project marketing expenses and collection commissions. The allegations against Cognizant concerned construction overruns, with the contractor’s bill concealing reimbursement for the permit payment. In each account, knowing the business purpose behind the entry is what makes the accounting description meaningful to an investigator.

What Money Determines the Reward?

For eligible SEC whistleblowers, awards can total 10% to 30% of qualifying monetary sanctions the government collects. We work with you to assess what your account adds to the payment trail and bring in FCPA whistleblower lawyers for the questions specific to your circumstances.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program from the FCPA enforcement described here.

You Know Why the Contractor Sent That Bill

If you know which permit, instruction or payment sits behind a contractor’s invoice, speak to one of our Whistleblower Experts about the payment behind that bill. We build the case around the transaction you understand, connect you with FCPA whistleblower lawyers who know foreign bribery and accounting cases, and stay beside you as your partners through the process.