Infosys Sets Aside $35 Million to Settle U.S. Government’s Visa Fraud Case

Don Tennant

The U.S. government’s multi-agency investigation of alleged immigration fraud on the part of Infosys has forced the Indian IT services provider to set aside $35 million to pay for a settlement it’s trying to negotiate with federal authorities.

Infosys acknowledged the financial hit in an addendum to its quarterly report for the quarter ended Sept. 30. According to the Associated Press, Infosys’s net profit for the quarter dropped 11.1 percent from the previous year, to $383 million. Without the $35 million provision, the drop would have only been 2.7 percent.

This is the first time Infosys has placed a monetary figure on the cost of settling the U.S. government’s investigation, which was prompted by a civil lawsuit filed by Infosys employee and whistleblower Jay Palmer. That lawsuit documented alleged visa fraud related to Infosys’s use of B-1 business visas. Here is the relevant excerpt from Infosys’s addendum to its quarterly report:

On May 23, 2011, the company received a subpoena from a grand jury in the United States District Court for the Eastern District of Texas. The subpoena required that the company provide to the grand jury certain documents and records related to its sponsorships for, and uses of, B1 business visas. The company complied with the subpoena. In connection with the subpoena, during a meeting with the United States Attorney’s Office for the Eastern District of Texas, the company was advised that it and certain of its employees are targets of the grand jury investigation. The company was subsequently advised that this investigation was continuing and that additional subpoenas may be issued. 


In addition, the U.S. Department of Homeland Security (“DHS”) reviewed the company’s employer eligibility verifications on Form I-9 with respect to its employees working in the United States. In connection with this review, the company was advised that the DHS has found errors in a significant percentage of its Forms I-9 that the DHS has reviewed, and may impose fines and penalties on the company related to such alleged errors.

In pursuit of a civil resolution, the company is engaged in discussions with the U.S. Attorney’s Office and other governmental departments regarding these matters, and based on the current status of such discussions, has recorded a provision of 219 crores [$35 million] including legal costs. The company intends to continue discussions with the U.S. Attorney’s Office and other governmental departments. However, it cannot predict the final outcome of these discussions. In the event that the U.S government undertakes any actions which limit the B-1 business visa program or other visa program that the company utilizes, imposes sanctions, fines or penalties on the company or its employees, or undertakes any other actions against the company arising from the investigations or discussions that are currently ongoing, this could materially and adversely affect the company’s business and results of operations. 

 



Add Comment      Leave a comment on this blog post
Oct 12, 2013 7:42 AM DrGeneNelson DrGeneNelson  says:
Thank you for your ongoing coverage of this case, Don. Too bad ALL H-1B Visa program abusers - which in my mind include the "mainstream" firms such as Microsoft, Texas Instruments, and Intel - will not be sanctioned as aggressively as Infosys is likely to be sanctioned. These controversial work visa programs have destroyed the technology-based careers of millions of Americans, including my own career as a natural science Ph.D. Since these employer-designed programs are laden with loopholes - and have a history of political corruption, they should be immediately terminated as "bad laws." Reply
Oct 14, 2013 10:17 AM Hoss Hoss  says: in response to DrGeneNelson
We as American should boycott, as much as possible, these "mainstream" American companies that hire H1B's. These mainstream american companies want us to purchase their goods and services but don't want to hire American's. I no longer use Facebook...may not be a lot but makes me feel better. Reply
Oct 15, 2013 1:18 PM Chamat Chamat  says:
Unfortunately Palmer and team will not get a penny from this after losing the discrimination case last year. Reply
Oct 16, 2013 3:58 AM Truth Truth  says: in response to DrGeneNelson
A large fine on Infosys would be good, but it would do nothing for the many IT workers and others that have gotten screwed over the years by greedy companies that outsource to companies like Infosys. But keep voting for Republicans and Democrats and you'll keep getting more of the same: increased H1B allowances, trade agreements that encourage such, & etc. Both of these political parties have brought the economy and citizens to the point of ruin. Reply
Oct 16, 2013 3:22 PM Wakjob Wakjob  says:
US gov't gets some cash InfoSys gets a small slap on the wrist We the People continue to get shafted Reply
Oct 29, 2013 10:53 PM Rediculous Rediculous  says: in response to Chamat
Well as published larest in ndtv.com, Palmer will get 5 million out of 35 million. Reply
Oct 30, 2013 11:12 PM Criminal Criminal  says:
Does USA have a rate list for getting away with crimes? This amouont is not even a proper fine for Infosys. Reply

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