Infosys ran ‘unlawful’ visa scheme, U.S. alleges in settlement

In a settlement announced today, the U.S. government alleges that offshore outsourcing giant Infosys violated visa laws to increase its profits, reduce visa expenses and avoid tax liabilities.

But the allegations, and the evidence the government says it has to back them up, will remain just that — allegations. Instead of pursuing a court case, the U.S. will accept a $34 million settlement payment from Infosys.

That’s how the government typically handles visa violation claims, but in this instance, the government said it is the largest settlement ever reached.

Infosys denies any wrongdoing in the agreement, which is signed by both parties.

This settlement figure represents a fraction of the $6.99 billion in 2012 revenue generated by the Bangalore, India-based IT service provider.

The government action addresses the company’s use of the B-1, or business visitor visas, for work that allegedly required H-1B visas.

Generally, a B-1 visa is intended for short-term visits to the U.S., such as trips to attend conferences or negotiate contracts. B-1 visas are relatively easy to get and aren’t subject to any of the caps, fees, or wage requirements that govern use if H-1B visas.

Infosys, which applies for thousands of H-1B visas every year, “unlawfully” supplemented its workforce with B-1 visa workers, according to the U.S. complaint, which alleged that Infosys wrote letters to U.S. officials with “false representations regarding the true purpose” of a B-1 worker’s activities. For example, the company would tell officials that a worker was coming in for discussions, when the real reason was to do work that required an H-1B visa, such as programming. Visa applicants were also told what to say to avoid suspicion, according to the government.

“We will not tolerate actions that mislead the United States and circumvent lawful immigration processes, whether undertaken by a single individual or one of the largest corporations in the world,” said John Bales, U.S. attorney for the Eastern District of Texas, whose office conducted the investigation. “The H-1B and B-1 visa programs are designed and intended to protect the American worker, and we will vigorously enforce the requirements of those programs,” he said in a statement.

In the settlement, Infosys denies any wrongdoing and says its B-1 visa use “was for legitimate business purposes and not in any way [designed] to circumvent the requirements of the H-1B program.”

The company reiterated that position in a statement Wednesday and said it “disputes any claims of systemic visa fraud” and other claims, arguing that such claims are “untrue and are assertions that remain unproven.”

Infosys says that “only 0.02% of the days Infosys employees worked on U.S. projects in 2012 were performed by B-1 visa holders.” But that’s a reference to visa use in the year after the government launched its probe, which started in 2011.¬† Infosys has not disclosed the size of its U.S. workforce, or the percentage of its workforce on visas.

The person who triggered the investigation was Jay Palmer, an Infosys employee and Alabama resident who filed a lawsuit against the outsourcing company that drew attention to its use of the B-1 visa.

Palmer said that after he refused to participate in a plan to use B-1 visa workers for jobs requiring H-1B workers, he was threatened and harassed. Palmer’s case in federal court didn’t make it to trial because of provisions in Alabama’s “at-will” employment law. In dismissing the case, U.S. District Court Judge Myron Thompson¬† said he couldn’t rewrite state laws but nonetheless made it clear that the alleged threats against Palmer were “deeply troubling.” The case didn’t touch on visa law, which is what a Texas grand jury was looking into.

Palmer’s attorney, Kenneth Mendelsohn, said Palmer “was the guy who had the courage to stand up.

“There were many people in Infosys that knew this was going on and just turned the other cheek,” said Mendelsohn. “Jay just morally could not do that, even at the risk of harassment and threats.”

Palmer gave credit to the federal investigators. “Today is not about me, today is about Ed Koranda, and Tim Forte and the U.S. government and their findings and enforcement of the law,” said Palmer, in an interview, referring to the two special agents who investigated the case.

Palmer also said that he “harbors no hard feelings” toward Infosys Executive Chairman Narayana Murthy.¬† “I only wish he would have reached out to me over the last 2.5 years,” he said.

“What people don’t understand is I tried to fix the problem before I got an attorney, before I turned them in,” Palmer said.

The settlement doesn’t affect Infosys’ ability to obtain visas in the future. But it’s unclear whether this agreement is the end of the company’s problems.

The government’s settlement said that Infosys circumvented visa law “for the purposes of increasing profits, minimizing costs of securing visas, increasing flexibility of employee movement, obtaining an unfair advantage over competitors, and avoiding tax liabilities.” These allegations could invite a closer look from the Internal Revenue Service or the U.S. Securities and Exchange Commission.

Infosys, as part of the settlement, also agreed to improve its visa compliance procedures.

Ron Hira, a public policy professor at the Rochester Institute of Technology and a researcher on tech immigration issues, points out that the $34 million settlement represents a “mere 2% of Infosys profits of $1.7 billion last year.”

“Hopefully, policymakers and journalists don’t draw the conclusion that the ‘system works’ because Infosys has settled,” Hira said. “Instead, they should see this for what it is — one small indication of the vast extent to which firms are exploiting loopholes in the visa programs to bring in cheaper foreign workers to displace and undercut American workers.”

John Miano, founder of the Programmers Guild, said “it is great to see the government finally doing something.” He contends that the use of the B-1 visa to import labor is widespread.

“Until the government starts seeking criminal actions against individuals, illegal actions like this will continue,” Miano said.

Retrieved from ComputerWorld