As highlighted in this prior post, in February 2019 (based on the same core action in the Cognizant Foreign Corrupt Practices Act enforcement action) Gordon Coburn (former President of the company) and Steven Schwartz (former Executive Vice President, Chief Legal and Corporate Affairs Officer) were criminally and civilly charged by the DOJ and SEC.
The defendants are putting the government to its burden of proof and as highlighted in this prior post last Fall the SEC’s case was stayed due to the parallel criminal action.
In the criminal action, U.S. District Court Judge Kevin McNulty (D.N.J.) recently largely granted defense pre-trial motions concerning potential discovery.
The first concerns defendants request for “an evidentiary hearing to determine the extent of the cooperation” between the DOJ and SEC in the Cognizant matter. The second concerned issuance of subpoenas to Cognizant and Larsen & Toubro Construction company (an entity which allegedly acted as a conduit of a bribe at issue in the case) regarding the “issue of investigative ‘outsourcing’ as it relates to a potential pretrial motion for suppression of coerced statements of Coburn and Schwartz.
The level of cooperation between the DOJ and SEC is relevant to the defendants motion to compel discovery of materials in the possession of the SEC and whether the DOJ has a duty to review material possessed by the SEC and to produce any discoverable material.
As stated in Judge McNulty’s order:
“The prosecution [DOJ] denies that certain joint steps were taken, but does not provide a comprehensive explanation as to what kind of cooperation there was. The admission that the SEC attended meetings with Cognizant counsel and the [DOJ’s] press release’s praise of “significant cooperation”[by the SEC] —perhaps a bit of interagency diplomacy, but perhaps not— provide enough of a basis for inquiry into whether there was more to the relationship than the SEC’s merely sitting in on witness interviews.
In short, I will grant the defense’s request for an evidentiary hearing to determine the extent of the investigative cooperation between the prosecution and the SEC.”
Regarding the subpoenas to Cognizant and L&T, the judge concluded that “Schwartz has made a strong argument to require production of some [documents relating to the DOJ’s role in Cognizant’s and L&T’s internal investigation] in advance of a hearing on a potential motion to supress.