Cognizant Technology Solutions on Friday announced that it had begun an internal investigation into probable unlawful payments it made to set up facilities in India to check whether they flouted laws in the United States. The company said it was looking into whether "certain payments relating to facilities in India were made improperly and in possible violation of the US Foreign Corrupt Practices Act and other applicable laws," in a filing to the US Securities and Exchange Commission as well as the Justice Department.

The disclosure of the possible violations came as the tech firm's president Godurn Coburn quit, to be replaced by Rajeev Mehta, who was the chief executive of IT services of the company. Cognizant did not specify a reason for Coburn's resignation. The announcement also led to Cognizant's shares plunging by nearly 12% as it opened on the American stock exchange Nasdaq, where it is listed, Business Standard reported.

The solutions firm said their audit committee was supervising the inquiry with help from an outside counsel and the focus on a few facilities owned by the company. Officials close to the investigation said a team of lawyers from a US firm, which had arrived in Chennai a few weeks ago, was looking into a number of land deals the company had signed to establish development centres. "There were allegations that at various points in time, bribes were paid to different political parties. The investigators were quizzing several people, including senior officials," the officials told The Times of India.

A Cognizant spokesperson refused to divulge details of the "ongoing internal investigation", but said they intend to conduct a thorough inquiry. "We uncovered this situation through our own compliance processes and voluntarily notified the relevant US agencies and are fully cooperating with them," the spokesperson said. Voluntary disclosure of any violations in the US warrants certain leniency with regard to fines imposed.