Infosys Technologies, which was recently rocked by allegations against its top executives by a group of whistleblowers, claimed it had yet to find any evidence to corroborate the complaint, but investigations were ongoing.
A group of anonymous employees, who call themselves “ethical employees,” accused Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy of unethical practices to boost short-term revenue and profit for recent quarters.
They alleged the company’s top management presented a rosy financial picture by ignoring visa costs in one quarter and not immediately recognizing US$50 million in reversals in one contract.
On October 24, the National Stock Exchange sought clarification from the IT major on the whistleblowers’ allegations and why the company had not disclosed the issues to the exchanges.
In its response, the company said the audit committee had already engaged law firm Shardul Amarchand Mangaldas & Co to investigate the matter, and had also started consultations with independent internal auditor Ernst & Young.
In a statement to stock exchanges, India’s second-largest software services company said: “With respect to the anonymous complaints, there is no prima facie evidence that the company has received until date to corroborate any of the allegations made.”
Infosys, however, said that the anonymous complaints are still under investigation and the “company is not in a position to determine the concreteness, credibility and materiality of the anonymous complaints.”
It added that it will “update the stock exchanges on the basis of key findings of the investigation reports once these are concluded.”
The complaints have been placed before the audit committee according to the company’s practice and will be dealt with in accordance with the company’s whistleblowers policy, Infosys had said in a statement.
To ensure independence in these investigations, the Chief Executive Officer and Chief Financial Officer have been recused from the matter, chairman Nandan Nilekani said in a statement to the stock exchange.
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In September, the whistleblowers sent a letter to the company’s directors and the US Securities and Exchange Commission (SEC) making allegations against Parekh and Roy.
The complaint alleged that Parekh had directed key employees to make “assumptions” to show margins. The employees said they were instructed not to share large deal information with auditors.
The US SEC had also initiated a probe on the matter, while Rosen Law Firm said it was preparing a class action lawsuit to recover losses suffered by Infosys investors in the US.
The Indian market regulator Securities and Exchange Board of India had sought additional information from the company, while the National Financial Reporting Authority, part of the corporate affairs ministry, was looking into alleged accounting lapses at the firm.
The allegations came two years after the Bangalore-based IT major endured a shake-up that saw its top boss Vishal Sikka leave the company. An SAP veteran, Sikka was the first non-founder chief executive and was its MD and CEO for three years.