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Do Infosys' Clients Share Culpability in Alleged Visa Fraud?

Don Tennant

Now that the visa fraud lawsuit against Infosys, along with the U.S. government's ensuing criminal investigation of the company, is finally getting more widespread mainstream press coverage, a very unwelcome spotlight is being shined on Infosys' U.S. clients. A key question that's begging to be asked is an uncomfortable one: Do those clients share culpability if Infosys employees are found to be working illegally on their premises?

 

I posed that question to Kenny Mendelsohn, the attorney who filed the civil suit against Infosys on behalf of Infosys employee and whistleblower Jay Palmer. My sense was that Mendelsohn had his doubts about whether legal action would realistically be taken against the clients, but he made it clear that it's certainly possible:

My understanding of the law is that there is that possibility, although it would be up to the federal prosecutors to pursue something like that. There are some provisions in the law that say if you have people working for you, even through a contract, if they are here on improper visas or are illegal aliens, you can be held responsible for it. I think [the client companies] would have a lot of defenses, but then again, that would be for their lawyers and the State Department and Homeland Security [to address]. So there's a possibility of a technical violation, but they'd have defenses to it, because they were all relying on Infosys to do the correct thing.

The provisions in the law he was referring to are found in Section 274A of the Immigration and Nationality Act. Mendelsohn cited as an example the fact that there have been cases in which homeowners who employ contractors that hire illegal aliens have been held liable for that transgression. He noted that a critical factor in this case is whether an illegal Infosys employee reports directly to an Infosys manager, or to a manager in the client company:

If they're reporting directly to the client, that gives the client a lot more exposure and a lot more at risk, because there's a lot more responsibility on the client. But so much of criminal law really comes down to knowledge-what you know about what's going on, and any criminal intent behind it. What you typically see is that if the client is actually supervising the employees, they have more control and the ability to gather more information-that's why the exposure is greater when Infosys employees are reporting directly to the client. But it still comes down to the interpretation of that statute and how the government would want to pursue it.

I asked Mendelsohn what his advice would be for an Infosys client company to avoid being held liable. His response:

If I was one of their clients, knowing what I know right now, the first thing I'd be doing is going through my facility, wherever the Infosys people are working, and demand to see their passports to determine what visa they're here on. If I had someone working for me on a B1 visa, I would have him leave my facility immediately, and I'd be contacting Infosys to verify who was here on B1s, and who wasn't. And then I'd take a closer look at the H1s, too, to see if they're actually doing specialized work. The first thing I'd be doing is making my own determination of whether I had any people there illegally, because if you make the determination that they're there, clearly you have the responsibility to not allow them to keep working for you.

Now, given how easy it is to imagine that Infosys' clients aren't too happy about all of this, another question that's begging to asked is this one: Do those clients have grounds to file any kind of lawsuit against Infosys? I posed the question to Mendelsohn, and he said it's something the clients could pursue:

One of the things that comes out in any lawsuit, in order to have a direct claim, there's got to be some form of damages. I'm not sure that there would be any from the direct violation of using illegal aliens. What I would be concerned about if I was being asked for advice by one of the clients is how their company was being charged by Infosys. If you're paying a rate for certain employees, and they're not legal employees and you're overpaying for their work, there could be a breach of contract claim, or a possible fraud claim. So I'd be looking at it from the standpoint of whether I was being charged correctly.

I also asked Mendelsohn whether a client company would have grounds to sue Infosys from the standpoint of damage to its reputation. In his response, he referred to Wal-Mart, an Infosys client that the New York Times reported had been contacted by federal investigators seeking information about its Infosys contracts:

That gets back to what I was saying about damages. If a company could show that it has incurred some form of damages, even if it's a damage of reputation, then that could support a claim. But I'm not sure that anybody's in that situation. It comes down to whether they have a claim against Infosys for putting them in this posture. Technically, legally, yes. Could it survive? I'm just not sure, because I don't know what the damages would be. I certainly don't think it helps anybody's reputation. From Wal-Mart's standpoint, they've already had some bad publicity about mistreating women employees, not treating females like they do males; and issues a few years ago about having illegal aliens as janitors. And now it's coming out that they most likely had illegal aliens from India working for them. I don't think that helps, but I'm not sure you could quantify that as any real damages to Wal-Mart, either. So do they have a possible claim? Yes. Do they have a real claim where they could recover something in court? I'm not sure.

What we do know is that Infosys' U.S. client list includes a lot of extremely high-profile companies that certainly have the wherewithal to take legal action. A cursory Google search yielded a list of Infosys clients that have a lot of clout in a broad range of industries. Here are some I found, in no particular order:

 

  • Johnson Controls
  • Lowes Companies
  • Sun Trust Bank
  • Xilinx
  • Boeing
  • Kraft Foods
  • MoneyGram International
  • City of Orlando
  • Career Education Corp.
  • The Capital Group Companies
  • Microsoft
  • Cummins Inc.
  • Citigroup
  • Baker Hughes
  • LexisNexis
  • Proctor & Gamble
  • Pfizer
  • Emerson
  • Novartis Consumer Health
  • Juniper Networks
  • Exterran
  • Mercy Health Plans
  • Kids Headquarters

 

As I look down this list, I'm reminded of the recent comments of Robert O. Blake, assistant secretary for South and Central Asian affairs in the U.S. State Department, who was asked about the visa fraud allegations against Infosys and what their impact will be on trade relations between India and the United States. As I reported in my post, "Pain Ahead for Infosys, Other Indian IT Service Providers," Blake had this to say:

That will be, I think, a sort of momentary blip. Infosys itself is obviously a very well-known company and will continue to be a very important partner for a wide range of American companies.

This was my response:

I'm not so sure. I have to wonder if Blake is familiar with the extent of the allegations against Infosys, and of the U.S. government's criminal investigation of the company. Infosys' U.S. clients are almost certainly already getting antsy about the notion of illegal employees working on their premises. If Infosys is found to be guilty of widespread criminal activity in this country, it's difficult to imagine that the company would be seen as anything other than toxic.

The more I think about it, the more certain of that I am. Regardless of whether any of Infosys' clients go so far as to take legal action against the company, at the very least there will be many that will want to distance themselves as far away from Infosys as they can, as soon as they can. Anyone who has followed this case closely and is aware of the evidence against Infosys could hardly blame them.


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