Just over two years after Infosys grappled with serious allegations of corporate governance lapses that eventually led to its the then CEO Vishal Sikka abruptly stepping down, an anonymous group of the IT major’s employees have reportedly accused current CEO Salil Parekh and CFO Nilanjan Roy of indulging in “unethical practices”. The Bengaluru-headquartered firm confirmed having received the whistleblower complaint and said that the same has been placed before the audit committee as per the company’s policies.
“The company has received anonymous whistleblower complaints alleging certain unethical practices. These have been placed before the Audit Committee as per the company’s practice and will be dealt with in accordance with the company’s whistleblower policy …” Infosys said in a notice to the stock exchanges on Monday.
The firm’s audit committee is chaired by D Sundaram and board members Punita Kumar Sinha and Roopa Kudva.
US-listed shares of Infosys Ltd fell nearly 16 per cent in premarket trading on the New York Stock Exchange on Monday.
According to a PTI report, the whistleblower letter, which was shared with Infosys’ Board and the US Securities and Exchange Commission, claims that “critical information” has been hidden from the auditors and the Board.
The letter says that the group of employees are in possession of mails and audio recordings of the company CEO asking for the hiding of costs incurred on visas and reversals of upfront payments in contracts.
Further, it alleges that in large contracts like Verizon, Intel and joint-ventures in Japan, and the ABN Amro acquisition, “revenue recognition matters are forced which are not as per accounting standards”.
“We have emails and voice recordings and we will share when investigators ask us … Large deal approvals have irregularities. The CEO is bypassing reviews and approvals and instructed sales not to send mails for approvals…,” the letter noted.
The whistleblowers have also reportedly claimed the CEO told them that “no one in the Board understands these things” and that “they are happy as long as share price is up”, adding that several billion dollar deals in the last few quarters have nil margin.
In the quarter ended September 30, the firm reported a revenue growth rate of 9.9 per cent year-on-year in dollar terms at $3,210 million and an operating margin of 21.7 per cent. In the previous quarter Infosys reported a revenue jump of 10.6 per cent year on year at $3131 million.
Infosys had roped in Parekh in January 2018 after Sikka stepped down in August 2017, after a standoff with the company’s founders including former CEO NR Narayana Murthy over allegations of corporate governance lapses and hefty severance packages of former CFO Rajiv Bansal. Later, Infosys settled with Sebi the case of alleged disclosure lapses regarding payment made to Bansal. It paid Rs 34.34 lakh to the markets regulator to settle the case.
Infosys has also received whistleblower complaints earlier pertaining to wrongdoings in its M&A deals, including in the acquisition of Israeli automation technology firm Panaya.
A whistleblower’s letter to Sebi in 2017 alleged violation of governance norms in a $200 million acquisition of Panaya in 2015 — shortly after Sikka took charge as CEO
While an internal audit committee investigation found no evidence supporting the Panaya allegations, Sebi had served a Wells notice to the company, informing that action may be initiated against the company.
Shortly after Sikka’s departure, the company’s co-founder Nandan Nilekani was brought in as non-executive chairman.