Infosys co-founder and non-executive chairman Nandan Nilekani said the company would take action if allegations raised by a whistleblower were substantiated.
However, he also reiterated his faith in current Chief Executive Officer Salil Parekh and the “outstanding” finance team at Infosys.
The controversy arose when an anonymous whistleblower group called ‘Ethical Employees’ alleged that the company’s current management was taking ‘unethical’ steps to spur short-term revenue and profits. The group 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.
In a conference call with investors, Nilekani said: “While I will not comment on the merits of the allegation at this time, the company will take action if the allegations are substantiated. Infosys is committed to defining and following the highest corporate governance standards. We will provide a summary of the ongoing investigation after it is complete,” he said.
Nilekani also said he felt “insulted by the accusations. But let the report come out.”
“Infosys is committed to defining and following the highest corporate governance standards. We will provide a summary of the ongoing investigation after it is complete,” he added.
The non-executive chairman said the company had responded responsibly to the complaints and complied with the applicable laws and past practices. It appointed a law firm Shardul Amarchand Mangaldas to investigate the allegations.
“The company became aware of the complaint on September 30, which was placed before the audit committee. On October 18, i.e. two days before the complaint was leaked, Chair of the audit committee decided to hire outside party to investigate complaints,” he said.
Backing Parekh, Nilekani said he would give full credit to the CEO for the company’s growth. He pointed out that in the last four quarters Infosys on average had grown 11.4%.
“Speculations are aimed at tarnishing the image of some of the most accomplished and respected individuals,” he said in a statement. Large margin deals are entirely decided by the management, which is fully within its right to take calls about margins,” he added.
“Our role is to bring this investigation to an appropriate conclusion in the best possible time … The company will provide a summary of investigation once it is complete,” he said.
Earlier in the day, Moneycontrol.com reported that a co-founder of the company and a former senior executive had conspired with the whistleblowers who made allegations of corporate governance failures at Infosys.
It claimed that those inquiring into the allegations are also convinced that the whistleblowers acted in concert with the co-founder and the former senior executive.
In response, Infosys issued a statement saying it strongly condemns the mischievous insinuations made by anonymous sources against the co-founders and former colleagues.