Wednesday, 30 October 2013

Infosys likely to be slapped $35-mn fine

WSJ report says this would be the largest immigration fine ever

The US government was likely to slap a fine of $35 million (Rs 219 crore) on Infosys, India’s second-largest IT services firm, over charges of inappropriate use of visitor visa for business purposes, The Wall Street Journal (WSJ) reported on Tuesday, citing unnamed sources. This would be the “largest immigration fine ever”, it said, adding an announcement on this was expected to be made on Wednesday.

Infosys did not directly reply to a query on whether the case was expected to be settled on Wednesday and if it had to pay such a hefty fine. But it said it was not involved in any systematic visa abuse in the US. “In response to reports attributed to Justice Department officials, Infosys is in the process of completing a civil resolution with the government regarding its investigation of visa issues and I-9 documentation errors. The resolution has not been finalised,” the firm said in a statement. “Infosys denies any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse,” it added.

The WSJ report said the US authorities were likely to say the Indian IT services major had illegally placed workers on visitor visas, rather than work visas, at clients across its largest market.

The US Justice Department and the Homeland Security Department have been investigating Infosys’ visa practices for over two years. The probe had been triggered by allegations the Bangalore-based firm used business travel documents to place Indian employees on temporary positions in American companies.

Interestingly, Infosys had earlier this month made a provision of exactly $35 million for settlement of the case, which dates back to May 2011, when the company had been issued a sub-poena by the US authorities asking it to furnish details of its business visa use. The provision included legal costs associated with the probe, the company had said.

On its $35-million provision, Infosys CFO Rajiv Bansal had told Business Standard earlier this month: “Based on the way the discussions are today, we felt it was necessary to make the provision. Right now, the discussions are on and based on the assessment of those, we have made the provision,”.

“The fact is, you have to make certain accounting provisions, depending on the situation. We might not use a dollar out of it, or we may spend more,” he had said.

The WSJ report said the US government authorities had found Infosys brought an unknown number of employees for long-term stays in the country on inexpensive and easy-to-get B-1 visas (which cover short business visits) in place of H-1B visas, which are generally hard to get.

The resolution to the case would only include civil penalties and constitute a full resolution to the case, the report added.

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