Infosys shares suffer on whistleblower complaint against top brass

Salil Parekh

Salil Parekh, Chief Executive Officer, Infosys

Shares in Indian IT services exporter Infosys Ltd nosedived on Tuesday after a whistleblower complaint alleged “unethical practices” by its top management. Shares fell as much as 16 per cent to 645 rupees apiece, in their worst intraday fall in over six years.

The letter by certain employees of the IT bellwether alleged that they were asked not to fully recognise certain costs to improve revenue and profits, according to media reports. In a press statement, it said that it has received anonymous whistleblower complaints alleging certain unethical practices and has placed them before its Audit Committee as per practice.

The complaint has also been filed with the US Securities and Exchange Commission (SEC).

The letter pointed out multiple instances of unethical practices by CEO Salil Parekh and CFO Nilanjan Roy with regards to large deal wins, according to reports. They alleged that information related to these deals were suppressed from the auditors and the board members. It further alleged that the CEO and CFO put pressure on treasury to boost other income by taking higher risks to improve near-term profitability. The letter also alleged that they were told to withhold data on large deals and important financial measures as it will garner board’s attention.

In response to the allegations, Chairman Nandan Nilekani said that the complaints were “being dealt with in an objective manner” and that the “undated whistleblower complaint largely deals with allegations relating to the CEO’s international travel to the US and Mumbai”.

He added that they have not been provided with the emails or voice recordings, but ensured that the generalized allegations will be investigated to the fullest extent. Additionally, to ensure independence in the investigations the CEO and CFO have been recused from this matter, Nilekani said.

To carry out independent investigations, the Audit Committee has retained the law firm of Shardul Amarchand Mangaldas & Co., Nilekani said.

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