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Steven Schwartz, 51, and former Cognizant president Gordon Coburn, 55, of Beaver Creek, Colorado, approved the payoff to secure the necessary permits for construction, U.S. Attorney for New Jersey Craig Carpenito said Friday.
To cover up the scheme, the pair and others “agreed that a third-party construction company would obtain the permit by making the illegal bribe payment and that Cognizant would reimburse the construction company through phony construction invoices at the end of the project,” the U.S. attorney said.
The front contractors secured the necessary government order for Cognizant to obtain the permit, allowing the publicly traded Fortune 200 technology services company to complete the development of the office campus and avoid millions of dollars in costs, Carpenito said.
Months later, the conspirators had Cognizant -- based in Teaneck, NJ -- funnel more than $2 million to the construction company “disguised as payment for cost overruns on the office campus,” he said.
The Department of Justice and Carpenito’s office aren't prosecuting Cognizant as a company because of its "prompt voluntary self-disclosure, cooperation and remediation, as well as Cognizant’s disgorgement to the Department and the U.S. Securities and Exchange Commission (SEC) of the cost savings that resulted from the bribery scheme," Carpenito said.
In all, Cognizant agreed to pay the SEC a civil penalty, disgorgement and prejudgment interest totaling $25 million, the U.S. attorney said.
“Corruption, bribery, and kickbacks have no rightful place in American business, and corporate officials who bribe foreign officials to gain a competitive advantage are breaking U.S. law,” Carpenito said.
Schwartz and Coburn were charged in a 12-count federal indictment with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), three counts of violating the FCPA, seven counts of falsifying books and records, and one count of circumventing and failing to implement internal accounting controls.
Both were scheduled to be brought before a U.S. District Court judge in Newark Friday afternoon.
Carpenito credited the FBI’s Newark Field Office with the investigation and thanked the SEC for its cooperation.
Handling the case for the government are Assistant U.S. Attorneys Courtney A. Howard and Nicholas P. Grippo, Attorney in Charge of the Trenton Office of the District of New Jersey, and Assistant Chief David A. Last of the DOJ Criminal Division’s Fraud Section.
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