L&T denies involvement in graft scandal

Indian construction major Larsen & Toubro on Tuesday denied any kind of involvement in the graft scandal that has hit the US IT major Cognizant.

"We wish to clarify that Cognizant Technology Solutions (CTS) had reached a settlement with the US Department of Justice and the US Securities and Exchange Commission in which it has acknowledged violations of the US Foreign Corrupt Practices Act (FCPA) in connection with the company's construction projects in India. This settlement appears to arise from an internal investigation by CTS that it first announced on September 30, 2016.

According to a news report in Mint, L&T facilitated the payment of $3.64 million in bribes to Indian government officials on behalf of Cognizant Technology Solutions Corp to secure permits, ranging from environment clearance to power, at the US company's campuses in Chennai and Pune.

Earlier, last week, Cognizant agreed to pay $25 million to settle a 2016 case under FCPA with US authorities. The Nasdaq-listed company routed the bribes through L&T to government officials in Maharashtra and Tamil Nadu in the three years to 2015, the Mint reported quoting sources.

Although the US Securities and Exchange Commission (SEC) did not name L&T in the complaint that was made public, the person cited above said the construction arm of India’s largest engineering company made illicit payments and Cognizant reimbursed the money by disguising it as compensation for cost overruns.

It is reported that Cognizant India had asked L&T in 2014 to pay $2 million in bribes to a senior government official for the issuance of a planning permit for its campus in Knowledge Industry Township in Chennai, according to the SEC probe. A year before, in 2013, Cognizant India instructed L&T to pay $770,000 in bribes to a Maharashtra government official for seeking environmental clearance for a campus in Pune. Finally, L&T again paid $870,000 in bribes to government officials for construction-related permits in Siruseri, Chennai in 2015, again on behalf of Cognizant, the Mint report said.