Visa misuse investigation: Infosys likely to reach a settlement with US today

BANGALORE: Infosys is close to settling an investigation by the United States into alleged misuse of visas. A potential settlement with the US Attorney’s Office for the Eastern District of Texas is expected to be announced on Wednesday, US media reported, but Infosys said nothing had been finalised.

“In response to reports attributed to Justice Department officials, Infosys is in the process of completing a civil resolution with the government regarding its investigation of visa issues and I-9 documentation errors. The resolution has not been finalised,” Infosys said in an emailed statement.

A settlement, when it materialises, could reduce the negative overhang on the company that is beginning to get back on stable growth track after underperforming the industry for two years.

However, if the settlement implies wrong-doing, there could be greater scrutiny of the visa applications from company, especially at a time when demand is reviving in the United States, the company’s largest market.

While announcing the September quarter results, Infosys had said that it has set aside $35 million (Rs 215 crore) for legal costs related to a possible visa settlement in the US.

The company’s stock closed barely changed at Rs 3,327 on the National Stock Exchange on Tuesday.

The Bangalore company is being investigated by the US Department of Justice and Department of Homeland Security for wrongfully using short-term B-1 visit visas to send Indian employees to the US instead of H-1B visas. The B-1 visa is meant for business visits and not intended to be used as a work visa. The company has in the past denied any wrong-doing in visa-related matters.

In August, a Wisconsin-based software professional filed a lawsuit against Infosys for discriminating against US job applicants in favour of South Asians. In February, TCS settled a class action suit by former employees in the US for about $30 million.

For Infosys, the visa troubles started in 2011 after a former employee claimed that the company frequently circumvented H-1B visa rules by sending workers to the US on B-1 visas instead. This claim was dismissed. Last December, Infosys settled another employee lawsuit related to visa abuse in a California court.

“Infosys has been facing investigation by the Homeland Security Department into visa matters over the past two years. They do not have a choice but go for a settlement in this case,” said Rakesh Prabhu, partner and head of intellectual property and immigration practice at Mumbai-heaquartered law firm ALMT Legal.

Indian software companies have in the past come under the scrutiny of overseas lawmakers for circumventing visa rules. In April, Canada started an investigation after reports suggested the Royal Bank of Canada was using temporary foreign workers hired by iGate over locals.