SUMMARY
Whistleblowers accuse the company’s CEO and CFO of indulging in unethical accounting practices to boost short-term revenue and profits
The complaint was disclosed on Monday after which the stock slumped 16%
We will ensure that the generalised allegations are investigated to the fullest extent, said Nandan Nilekani
Infosys chairman Nandan Nilekani said on Tuesday that the whistleblower complaints are “being dealt with in an objective manner”. The company’s audit committee will conduct an independent investigation on the allegations.
The complaint, disclosed on Monday (October 21) in the US, accused the company’s CEO Salil Parekh and CFO Nilanjan Roy of indulging in unethical accounting practices to boost short-term revenue and profits.
Following the allegation, the stock slumped 16% on Tuesday, marking its biggest single-day fall since April 12, 2013, and touched a low of INR 645. To conduct an independent investigation, the audit committee of Infosys has also retained law firm of Shardul Amarchand Mangaldas & Co. “Additionally, to ensure independence in these investigations, the CEO and CFO have been recused from this matter,” Nilekani said in the statement to stock exchanges.
Not Received Any Emails Or Voice Recordings: Infosys
Infosys said it was made aware of a letter dated October 3, purportedly written to the office of whistleblower protection program in Washington D.C, on October 16. Infosys said it has not received any of the emails or voice recordings.
“Although we have not been provided any of the emails or voice recordings, we will ensure that the generalised allegations are investigated to the fullest extent,” Nilekani added.
However, the whistleblowers group that calls itself “ethical employees” said that the complainants have emails and voice recordings to substantiate the claims, in its complaint to the board of Infosys and the US securities and exchange commission (SEC).
“We have high respect for all of you and bring to your notice the unethical practices of CEO in recent quarters. Same measures are taken up in the current quarter also to boost short term revenue and profits,” the letter addressed to the board of directors, from whistleblowers, dated September 20, read.
In 2017, Infosys had witnessed a tussle between its high-profile founders and the previous management. The standoff was over allegations of governance lapses and issues relating to severance package doled out to former executives including ex-CFO Rajiv Bansal. The tussle led to CEO Vishal Sikka quitting followed by some board members. Infosys cofounder Nandan Nilekani was then brought in as chairman and Salil Parekh joined the company in January 2018 as CEO.
