Infosys under US security scanner for erroneous employee verification

Infosys under US security scanner for erroneous employee verification

A cyber cafe in China.

Highlights

  • “We believe players such as Cognizant, TCS and Accenture are growing partially at Infosys’ cost,” J P Morgan, a global bank said in a note on Infosys last week.
New Delhi:

Infosys, India's second biggest software services company, has said that the US Department of Homeland Security (DHS) has found errors in the I-9 forms the company filed with the Department. The I-9 form is used by an employer to verify an employee’s identity and to establish that the worker is eligible to accept employment in the US. Every employee hired has to complete an I-9 form at the time of hire.

"We have been advised that the DHS has found errors in a significant percentage of our Forms I-9 that the Department has reviewed. In the event that the DHS ultimately concludes that our Forms I-9 contained errors, DHS would likely impose fines and penalties on us," Infosys said in a filing with the Securities and Exchange Commission (SEC), the market watchdog in the US.

Analysts said there might be no immediate impact in terms of earnings per share for Infosys. However, the company may have to pay a penalty ranging from $110 to $1,100 for each erroneous form.
"In the event that any government undertakes any actions which limit any visa program that we utilize, or imposes sanctions, fines or penalties on us or our employees, this could materially and adversely affect our business and results of operations," the company added.


Shares of the company saw huge selling pressure today. It closed 4% lower at Rs 2,310.90 on the Nifty index, while the Nifty declined 1.7% to end at 5,200.

 

Infosys shares have been under pressure since the company announced its fourth quarter earnings earlier this month. The company failed to meet its quarterly guidance for the first time and also projected muted growth in FY13.

B1 visa case:

The company is facing charges of alleged violation of American visa norms. In May 2011, Infosys received a subpoena from a grand jury in a US District Court in connection with a lawsuit filed by one of its US-based employee.

The employee, Jack Jay Palmer, had alleged that Infosys was misusing B1 businesses visas issued by the US. B1 visas are issued for short-term business visitors and not for employees being sent onsite on work.

The subpoena, which Infosys said it is complying with, required the company to submit certain documents and records related to its sponsorships for, and uses of, B1 business visas.

“In connection with the subpoena, during a recent meeting with the United States Attorney’s Office for the Eastern District of Texas, we were advised that we and certain of our employees are targets of the investigation,” the filing said.

The company added that it intends to have further discussions with the US Attorney’s Office regarding the matter.

(With inputs from PTI)

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