Infosys doesn't admit to guilt, but will pay $34 mn US visa fine

New York: In a widely expected move, Indian tech giant Infosys reached a $34 million civil settlement on Wednesday with US authorities that would "resolve all allegations" and end visa-fraud investigations against the company. Infosys refused to admit guilt and stressed that it only agreed to pay the record fine to avoid the nuisance of "prolonged litigation."

After an investigation spanning two years, prosecutors on Wednesday unveiled the settlement as well as its accusations that Infosys "knowingly and unlawfully" brought Indian engineers into the US on business visitor, or B-1 visas, for onsite client projects in the US that actually required tough to get and expensive H-1B work visas.

Reuters

Reuters

Federal investigators from the Department of Homeland Security and the State Department also found extensive omissions and errors in the hiring records Infosys was required to keep, which allowed Indian engineers to continue working in America after their visas had expired, according to court documents.

The settlement says Infosys submitted letters to US Consular Officials that "contained false statements regarding the true purpose of a B-1 visa holder's travel in order to deceive US Consular Officials and secure entry of the visa holder into the US."

It also says that Infosys issued a "dos" and "don'ts" memo directing B-1 visa holders "to deceive US Consular Officials, including specific instructions to avoid certain terminology (like work and contract), to secure entry of the visa holder in the US."

Paying a fine, but not admitting guilt

Infosys, however, said in a press statement that there were some "paperwork errors" related to visa applications and that it had begun correcting them before the federal investigation even started. There was no evidence that the "paperwork violations allowed any Infosys employee to work beyond their visa authorization," it said.

Infosys struck a defiant stance while agreeing to pay the record fine. It steadfastly denied any claims of visa abuse and stated that the settlement would simply remove "the uncertainty of prolonged litigation."

"Infosys denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse. Those claims are untrue and are assertions that remain unproven," the news release said.

Infosys said it agreed to a civil settlement "relating to I-9 paperwork errors and visa matters that were the subject of the investigation. There were no criminal charges or court rulings against the company."

It's common for companies accused by the US government of transgressions to be allowed to settle the case by paying a fine but not admitting guilt. These deals are typically agreed to as a way to quickly settle cases which - if they went to court - would be both time-consuming and costly for both the government and the accused firm.

The settlement will require Infosys to ensure its visa practices are beyond repudiation. With the fines and extra scrutiny, Infosys will now find US revenues come at greater expense. Infosys which has deep pockets said it had accounted $35 million in its July-September results to settle the US visa case and cover legal costs.

Infosys employs 160,000 people in 30 countries, including about 15,000 people in the US.

Despite the settlement, it stands to reason that allegations Infosys broke visa rules to get Indian employees into the US will put India's outsourcing industry on eggshells.

Payday for Palmer

Wednesday's outcome is long-awaited relief to Infosys employee Jack B Palmer, who spurred the federal investigation by bringing a whistle-blower lawsuit against Infosys in 2011. In his lawsuit, Palmer claimed he was harassed at work, sidelined and received death threats for refusing to be in cahoots with an alleged Infosys scheme which flouted US laws by bringing in engineers from Bangalore on $160 B-1 visas, for onsite client projects in the US that actually required $5,000 H-1B work visas.

In August last year, Infosys dodged a bullet when Alabama federal Judge Myron Thompson threw out Palmer's harassment lawsuit against Infosys saying it had no legal legs because the claims, especially those related to threats, aren't covered by Alabama state law. The judge dismissed the case, entering a summary judgment in favor of Infosys.

Palmer has remained on Infosys' payroll, while cooperating with the federal investigation. The New York Times reported that Palmer could receive as much as $5 million from the payment Infosys will make to the federal government.

A second lawsuit was filed last year against Infosys by a former employee named Satya Dev Tripuraneni alleging retaliation from Infosys for blowing the whistle on visa practices.


Updated Date: Dec 20, 2014 23:43 PM

Also See