Ethical Employees, a whistleblower group, has allegedly complained to the US Securities and Exchange Commission and the Infosys Board that CEO Salil Parekh was indulging in unethical practices to boost short-term revenues and profits.
Infosys, in a statement, said: “The whistleblower complaint has been placed before the Audit Committee as per the company’s practice and will be dealt with in accordance with the company’s whistleblowers policy.”
In 2017 and 2018, a previous whistleblower had raised questions over corporate governance issues about Infosys. Indian regulator SEBI had even set up a probe committee to find out whether the allegations were true or not, BusinessLine reported.
The whistleblower had questioned the Rs 17.4 crore severance package of former CFO Rajiv Bansal and the financial irregularities in Infosys’ $200 million acquisition of Israeli software firm, Panaya.
Following the allegations and several developments later, the then Infosys CEO Vishal Sikka was forced to step down. He was replaced by current CEO Salil Parekh, while co-founder Nandan Nilekani took over as the non-executive chairman.
This time, the whistleblower group, said it has recordings and mails to show that Infosys was indulging in such practices. It has alleged that CEO Salil Parekh overlooks reviews and approvals for large deals.
The report, which first appeared in a financial newspaper, alleged that Parekh directs his key employees to make wrong assumptions to show margins.
It alleges that several billion dollar deals of last few quarters had nil margins and asked the company to get deal proposals, margins, undisclosed upfront commitments made and revenue recognition checked with auditors.
Infosys apparently has placed the whistleblower complaint with the audit committee.
This time, the whistleblower’s allegations have many more details than the earlier one. It talks about how the complainants were asked to not fully recognise visa costs in the quarter and were pressurised to not immediately recognise $50 million in reversals in a contract.
It alleged that the CEO and CFO Nilanjan Roy were pressuring the finance team to show more profits in their treasury management by taking risks and making changes to policies.
InGovern, a proxy advisory firm, said the whistleblower’s allegations against Infosys are specific in nature, and the audit committee needs to investigate and give investors the correct picture.
Shriram Subramanian, managing director of InGovern, said that last time, there was not much depth to the whistleblower complaint. But this time, there are specific complaints.
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