Two investigations instituted by Infosys Ltd into the severance payout to its former Chief Financial Officer Rajiv Bansal may have cleared the software services company of any wrongdoing but the Securities and Exchange Board of India (SEBI) has raised fresh red flags and pointed to three specific violations by Infosys.
SEBI served a show-cause early December informing that action may be initiated against the company for observed violations — the severance payout violating the remuneration policy of the company; no prior approval of the audit committee for the severance agreement and failure to make timely disclosures to the bourses.
Infosys responded by filing a consent plea which SEBI is examining.
After a complaint by a whistle-blower in February 2017, SEBI commenced an investigation into the allegations regarding the acquisition of Panaya and the severance pay to Bansal. During the examination, SEBI observed the three alleged violations by Infosys over non-compliance with the Listing Agreement and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In response to an e-mail questionnaire sent by The Indian Express, an Infosys spokesperson said: “We do not have any comments to offer beyond what was shared in our statement to the exchanges. There are no updates to share at this point”.
An e-mail sent to SEBI did not elicit any response.
On December 6, 2017, Infosys filed a notice informing the stock exchanges that it had submitted a settlement application with SEBI based on the undertaking that the company will “neither admit nor deny the finding of fact or conclusion of law”.
Infosys had agreed to pay a severance package of Rs 17.38 crore equivalent to 24 months of his salary to Bansal who quit in October 2015 but the company suspended these payments after paying only Rs 5 crore when the company’s founder N R Narayana Murthy raised red flags over the package.
Bansal then initiated arbitration action against Infosys to seek the payment of the remainder amount.
In March 2017, the Audit Committee of the Board of Directors of Infosys sought an investigation by Gibson Dunn and Control Risks into the whistle-blower complaints. Among other complaints, Gibson Dunn investigated the conclusions of findings by law firm Cyril Amarchand Mangaldas (CAM) in 2015 and 2016 into Bansal’s departure.
CAM was also mandated by Infosys to conduct the investigation. In June 2017, Gibson Dunn reported that it found no wrongdoing by Infosys or its directors. Later, after taking over as the non-executive chairman of Infosys, its co-founder Nandan Nilekani conducted a review of all the external investigations into anonymous complaints the company had previously received.
In October 2017, the company said that its Board “reaffirms the previous findings of external investigations that there is no merit to the allegations of wrongdoing”.