Visa row: Infosys reaches $1m settlement with NY
New York Attorney said Infosys had failed to properly compensate hundreds of workers and to pay applicable taxes.
Infosys has reached a settlement for $1 million with the state of New York for "systematically abusing" the H1-B work visa programme, allegations that Infosys has denied.
The development comes just days ahead of Prime Minister Narendra Modi meeting US President Donald Trump, where he is expected to take up the issue of H1-B visas for skilled workers.
In a statement, New York Attorney General Eric T Schneiderman said the $1 million settlement with the Indian IT firm has been reached to conclude the investigation.
It added that Infosys had failed to "properly compensate hundreds of workers and to pay applicable taxes, by systematically abusing the US visa rules in placing foreign workers at client sites in New York State".
Infosys denied any wrong-doing, saying the agreement concludes the State of New York's investigation relating to the amount of taxes the company paid in 2010-11 without any criminal or civil charges being filed. "While this investigation centred on alleged paperwork errors, the company committed no wrong-doing and denies all allegations made in this regard," the Bengaluru-based firm said.
Infosys said this settlement relates to legal issues already resolved under the 2013 settlement with the US Department of Justice and was reached by both parties to "avoid protracted litigation".
Infosys has a significant presence in New York State and provides consulting and outsourcing services to many New York-based clients in the financial sector, among other industries.
The settlement resolves a whistleblower's claims that Infosys, in the course of providing outsourcing services, routinely brought foreign IT personnel into New York to perform work in violation of the terms of their visas.
"We will not permit companies to violate our laws in order to undercut New York workers. My office is committed to ensuring that our state's labour marketplace is fair, competitive and transparent for all," the New York attorney general (NYAG) said.
The NYAG statement explained that in order to perform the services offered by Infosys in New York State, its foreign workers needed H1-B visas.
"But in order to avoid the difficulty and expense of obtaining such visas, the office contends that Infosys knowingly and unlawfully obtained temporary visitor visas (B-1 visas) instead," it said.
The NYAG contended that B-1 visas are much easier to obtain but because they apply only to visits, B-1 visa holders are not permitted to perform work of the kind Infosys workers were sent to New York to do.
"Infosys workers using B-1 visas were doing work that would otherwise have been performed by US citizens or H1-B visa holders, and were paid significantly less than what comparable US workers or H1-B visa holders would have been paid in the same positions," the statement said.
It added that, consequently, New York was deprived of taxes that should have been paid on the higher wages that Infosys avoided by its misconduct.
The settlement includes a recovery to the State for tax damages and applicable New York False Claims Act damages and penalties.
The settlement comes as Modi is set to arrive in the US for his first bilateral meeting with Trump and the issue of H1-B visas is expected to come up in discussion between the two leaders.
The Trump administration has vowed to reform the country's immigration system. He has been critical of outsourcing firms abusing H1-B work visa programme, saying it is used to bring in cheap foreign labour.
He also seeks to revamp the lottery-based selection process under which these work visas are allotted to outsourcing companies.
In May, senior Trump administration officials accused TCS, Infosys and Cognizant of unfairly cornering the lion's share of H-1B visas, taking jobs away from American workers.
Infosys co-founders keep away from AGM
For the first time in many years, Infosys' co-founders, including N.R. Narayana Murthy kept away from its Annual General Meeting as the 36th AGM for 2016-17 was held here on Saturday.
"None of the founders or promoters was seen at the AGM, even a hour after it began at 3pm. We have no idea why they did not turn up," a company spokesman told IANS.
Besides Murthy, Nandan Nilekani, S. Gopalakrishnan, S.D. Shibulal, K. Dinesh, N.S. Raghavan and Ashok Arora are the co-founders of India's second-largest software export firm.
Though Murthy attended the last AGM with son Rohan Murthy, his conspicuous absence along with other co-founders surprised many investors.
"It is surprising not to see Murthy at the AGM as he used to sit in the front row after demitting office for the second time in 2014. Former directors T.V Mohandas Pai and V. Balakrishnan, who were regular at the AGMs over the years, are also not to be seen," said old-time investor Ramana Reddy from the city.
Board chairman S. Seshasayee, co-chairman Ravi Venkatesan, CEO and managing director Vishal Sikka, chief operating officer U.B. Pravin Rao and independent directors Kiran Mazumdar Shaw, D.N. Prahlad, Roopa Kudva, Punit Kumar-Sinha and John W. Etchemendy presided over the meeting from the dais.
"Independent director, Jefferey S. Lehman from the US could not make it to the meeting due to unforseen circumstances," said the spokesman.
Aftr Seshasyaee delivered his speech as chairman and briefed the shareholders about the proceedings of the meeting, chief financial officer M.D Ranganath presented the company's financial performance for the fiscal under review.