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

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.