FBI questioned L&T CEO in Cognizant bribery case
3 min read 07 Aug 2023, 01:01 AM ISTS.N. Subrahmanyan, who became L&T's CEO in July 2017, was “formally interviewed” in Singapore on 21 May 2018, by officials from the US Attorney’s Office and FBI
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The outcome of the US government’s trial of two former Cognizant Technology Solutions Corp. executives in a bribery case in India could be a pivotal moment for Larsen and Toubro (L&T) Ltd’s chief executive officer (CEO) S.N. Subrahmanyan, who, in an undertaking to officials of the US department of justice (DoJ) and Federal Bureau of Investigation (FBI), denied any involvement of India’s largest construction company in the illicit payments.
Subrahmanyan, who became CEO in July 2017, was “formally interviewed" in Singapore on 21 May 2018, by officials from the US Attorney’s Office and FBI, according to a court filing in New Jersey made earlier this month by the defence counsel of Gordon Coburn, the former chief operating officer of Cognizant.
This is the first time three executives of L&T have been named in the more than four-year-old court case titled USA V Coburn et al.
The next date of the case hearing is set for 2 October.
Coburn, who resigned from Cognizant in October 2016, has sought the court’s approval for the statements given by Subrahmanyan and two other L&T executives to be admitted as part of the defence evidence.
“During the KITS project (Knowledge Industry Township in Chennai), Subrahmanyan was the head of Total Construction (division) and handled 60% of the operations of L&T. Ramamoorthy, the US government’s cooperating witness, stated that Subrahmanyan was involved in approving the improper payment by L&T to the Indian government official. Subrahmanyan is central to the facts of this case," said a court filing dated 3 August.
After the scam surfaced in 2016, Srimanikandan Ramamoorthy, a former executive of Cognizant who was responsible for managing the company’s real estate projects in India, is helping US investigative authorities.
“Upon questioning by the government, Subrahmanyan contradicted Ramamoorthy’s testimony. Subrahmanyan stated that he does not remember discussing the planning permit with Ramamoorthy and that he did not hear anything about a request from a government official for improper payment," said the filing. L&T is not a party to the ongoing case as both Coburn and Schwartz are being tried under America’s anti-bribery law, Foreign Corrupt Practices Act.
For now, the DoJ is investigating the role of former Cognizant executives who it argues paid $3.64 million in bribes to Indian government officials to secure permits, ranging from environmental clearance to power, at the American company’s campuses in Chennai and Pune between 2013 and 2015.
Since it filed a case against Coburn and Cognizant’s former chief legal officer Steven Schwartz in February 2019, DoJ relied on thousands of documents shared by Cognizant and undertook interviews of current and former company executives to show how the two executives approved these illicit payments to Indian officials when it was getting its corporate offices built by L&T.
Mint first wrote about L&T’s alleged role in facilitating the payments in its 17 February 2019 edition. So far, L&T has maintained that it does not have any proof of the involvement of any executive in the alleged illegal payments made to unnamed Indian officials.
It had then said: “We are not aware of any evidence that supports our involvement in making the alleged improper payments. We confirm that neither we nor any of our employees are a party to the proceedings brought in the US. We have no further comments to make on this issue."
An email sent to the lawyers of DoJ and Coburn also did not elicit a reply.
Two other L&T executives to have been formally questioned by the US authorities are Ramesh Vadivelu, the head of contracts at the ECC division and Balaji Subramanian, an executive at the ECC division. Vadivelu headed L&T’s commercial buildings department when it worked with Cognizant and is identified as a co-conspirator 3, according to a 2019 probe by the Securities and Exchange Commission, the US market regulator.
Subramanian was L&T’s planning engineer responsible for site coordination at the KITS project and assisted “with submitting the paperwork to the government agencies to obtain the planning permit and updated Cognizant once the permit was obtained," according to DoJ. American investigative agencies quizzed Subrahmanyan and the two L&T executives after the US government sent a letter of rogatory or formal request to the Indian government.
“In an ideal world, yes, L&T should have made this disclosure of its senior executive being questioned by the DoJ and FBI to the exchanges," said the head of a proxy advisory firm on the condition of anonymity. “But the company can argue that it was not materially important information to be shared with minority investors. But for sure, if the two former Cognizant executives are implicated, then the reputation of both the CEO and L&T will take a beating."
An L&T spokesperson did not respond to an emailed request for comment.
