Infosys earmarks $35 million for fighting US visa case

Infosys has earmarked $35 million from its reserve during the second quarter ended September 30, 2013, to battle a legal case in the US on its alleged misuse of B-1 visas in the past.

"As we are engaged with the US attorney's office on a civil resolution of its government's investigation into our compliance with Form I-9 and past use of B-1 visas, we have set aside a reserve of $35 million, including legal costs," Infosys Chief Executive SD Shibulal said in a statement.

The provision for legal fee impacted the IT bellwether's net income in dollar terms during the quarter under review, as net income declined 11 per cent year-on-year to $383 million from $431 million and 8.4 per cent sequentially from $418 million in the first quarter (April-June).

"As discussions are ongoing, we cannot provide additional details at this time," Shibulal said.

The US immigration authorities issue B-1 visas for short-term visits to attend business seminars and restrict employees from engaging in gainful employment during their stay.

A district court in Texas, however, served a legal notice May 23, 2011, on the alleged misuse of B-1 visa rules by the company in the past.

In a regulatory filing in June 2011, the company admitted that any action by the US government against it in this regard would seriously affect its business in the North America market, which accounts for about 60 per cent of its export revenue.

The visa fraud allegations were levelled by its former US employee Jack Palmer, who filed a lawsuit in an Alabama court in February 2011, accusing the company of visa fraud.

"The company asked me to sign on documents, which said workers were heading to the US to have meetings rather than to work there, which he claimed was done to 'creatively' overcome H1-B," Palmer alleged in the lawsuit. He also alleged that the Indian techies on his team were paid substantially less than an American would have been paid in the same job.

Subsequently, Satya Dev Tripuraneni, an Indian techie who worked for Infosys for five years in California, filed another lawsuit Aug 2, 2012 alleging abuse of US work visas by the company. Tripuraneni also alleged that he had to quit the company due to harassment he faced from his managers after he reported the alleged visa fraud.