Raj Iyer, a former Army chief information officer who has led ServiceNow’s global public sector since early 2023, resigned after an internal investigation revealed that his hiring violated company policy.

The company received an internal complaint about potential compliance issues during the procurement process related to one of its government contracts. In its quarterly filing in May, the company disclosed that it initiated an internal investigation into the validity of those claims with the help of outside legal counsel.

As a result of the investigation, the board of directors determined that ServiceNow President and Chief Operating Officer CJ Desai violated company policy.

The company disclosed this in its report filed with the Securities and Exchange Commission on Wednesday. Desai resigned from all positions effective immediately.

“Throughout my tenure as a committed public servant, my actions were guided by integrity and a steadfast commitment to the best interests of the U.S. Army and the American people. My leadership in the digital transformation of the Army was driven by a genuine dedication to service, with no intent of personal gain. Indeed, I left a lucrative career in the private sector to fulfill my duty to the nation. I am confident that my conduct has been beyond reproach. Every single day, I worked hard to better position our Army to become digitally superior while at the same time driving down operating costs. I drove change in an institution nearly 250 years old, and I remain proud of what was accomplished,” Iyer told Federal News Network in a statement.

“My resignation from ServiceNow was voluntary and aligns with my personal values, and I do not wish to have my integrity questioned as a result of a potentially compromised hiring process.  I look forward to focusing on what is most important to me professionally: leading organizations and teams through their most important digital challenges and opportunities. I am optimistic that whatever I do next will continue to be guided by my passion and commitment to public service. For those who know me well, I know you will continue to place this trust in me.”
During the earnings call on Wednesday, ServiceNow Chief Executive Officer Bill McDermott said he believes it was an isolated incident and that the company is “further sharpening hiring policies and procedures as a result of the situation.”

ServiceNow has notified the Justice Department, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office about the internal investigation.

“It’s obviously a significant matter. They wouldn’t have reported it the way they did and they wouldn’t have taken as swift and severe action as they did,” Bob Westbrooks, a former inspector general at the Pension Benefit Guaranty Corporation, told Federal News Network.

In 2023, the Justice Department revised its corporate compliance guidelines, which incentivize companies to voluntarily disclose possible violations by giving them credit for swiftly and proactively disclosing and remediating any issues.

“If this were to turn into a criminal investigation against the company, they would actually get credit for alerting authorities and taking swift remedial action. So there’s an incentive for companies to handle it this way,” said Westbrooks.

Iyer joined the Army in 2020 and became the first full-time civilian to hold the chief information officer position. In December 2022, the service awarded a $432 million contract for the procurement of various ServiceNow products, including software and hardware asset management, IT asset management, IT operations management and customer service management. The contract is set to be completed by December 2027​.

“I’m sure [DOJ and OIG] are looking at the circumstances surrounding the award of that contract. The role of the former Army CIO in specific role and knowledge during that contract. They would probably be looking at any conversations that were had or representations regarding negotiations for post-government employment. And then they would be looking at the back end. It’s the contract award, so whether there was any sensitive procurement information passed, I would guess that would be looked at. One would think they would be looking at whether there was any pre-employment negotiation or consideration,”  said Westbrooks.

The Defense Department Office of Inspector General didn’t respond to requests for comment, saying it “neither confirms nor denies the existence of administrative and/or criminal investigations to protect the confidentiality of those involved and the integrity of the investigative process.”

“Having officially questioned Dr. Iyer’s decision-making on non-competitive procurements to the IG and acquisition oversight, I am delighted to finally see some accountability in DoD for these maleficences,” John Weiler, the executive director and co-founder of the IT Acquisition Advisory Council, told Federal News Network.

Desai joined ServiceNow in 2016 as a chief product and engineering officer. He became chief operating officer in 2022 and company president in 2023. ServiceNow said Desai has fully cooperated with the investigation and maintains that he did not intentionally violate company policy.

“After nearly eight years, 16 major platform releases, numerous new product launches, and AI innovation at a remarkable clip, I am saying goodbye to ServiceNow. Growing ServiceNow has been a fantastic and immensely rewarding journey. I have greatly enjoyed working with, learning from, and building lasting relationships with incredible colleagues, customers, investors, and partners,” Desai said in a LinkedIn post. “You will be hearing from me in the next few weeks as I embark on a new chapter in the AI, data and AI infrastructure space.”

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