Narayana Murthy backs Nandan Nilekani to fix governance lapses at Infosys
N.R. Narayana Murthy, in an investor call, hails overhaul of Infosys board, says he hopes new chairman Nandan Nilekani will do the right thing about the Panaya acquisition issue
Bengaluru: Infosys Ltd co-founder N.R. Narayana Murthy on Tuesday backed newly appointed chairman Nandan Nilekani to fix corporate governance lapses and also hailed last week’s overhaul of the board that resulted in the exit of four members, including previous chairman R. Seshasayee.
Murthy also took a direct shot at former and current board members, Jeffrey Lehman and Roopa Kudva, alleging that the board asked him to sign a non-disclosure agreement if he wanted to know the reason behind Infosys agreeing to pay Rs17.38 crore in severance to former chief financial officer Rajiv Bansal.
“You would all agree that the rejuvenation of the board has already begun with the resignation of Mr R. Seshasayee and some other board members. However, it is still a work in progress,” Murthy told investors at a conference hosted by Investec India in Mumbai.
Last week, Infosys named co-founder Nilekani non-executive chairman to help the company get back on track. Nilekani’s appointment, which was conditional on the overhaul of the previous board, resulted in the exits of Seshasayee, Lehman, John Etchemendy and Vishal Sikka, who had stepped down as CEO on 18 August.
Murthy, who called Nilekani “a stickler for good corporate governance”, said that he, Nilekani and the other Infosys founders had approached the board of Infosys in June last year after they heard of the board’s decision to hand out a Rs17.38 crore severance package to Bansal, who had reportedly opposed the software services company’s acquisition of Panaya.
“As there were several adverse media reports, Nandan, the other co-founders and I asked Mr Seshasayee on 28 June 2016 how the board arrived at this strange decision to pay such a large sum as severance. Mr Seshasayee told us that the decision was taken by Mr David Kennedy, the former general counsel. When we probed further whether the remunerations committee, the audit committee and the board applied their mind to this issue, there was silence from Mr Seshasayee. On 15 July 2016, when I asked the board members, in the presence of Nandan and Dinesh, why they agreed to pay such a huge severance amount, Mr Jeff Lehman said it was confidential and could not be disclosed to us. Ms Roopa Kudva said that we had to sign an NDA if we wanted to know the reason. So much for shareholder transparency and democracy! On 14 October 2016, Mr Seshasayee told us that the board agreed to pay this sum because they felt generous!” said Murthy.
Murthy also lambasted Seshasayee and the previous board for not recording the minutes of a particular board meeting—a development that was first reported by Mint on 16 February.
“According to media reports earlier this year the board did not record minutes of the severance to ex-CFO at the time the decision was taken. This concern was dismissed by the former chairman as a mere “housekeeping” matter. So much for good governance!” said Murthy.
However, Murthy also sounded a conciliatory note towards the current board that is being led by Nilekani and said that Infosys had already “started taking corrective steps”.
He said he hoped Nilekani would do the right thing with the report on an investigation into Infosys’s 2015 purchase of Israeli firm Panaya Ltd—an indication that Murthy hopes the full probe report will be made public by Nilekani at some point.
Last week, Nilekani had declined to directly answer whether the company would make the probe report public and instead pointed to Infosys’s statement, which said that he would get a full briefing on all investigations and “the appropriate course of action will be decided”.
An email purportedly written by an anonymous whistleblower had questioned the Panaya acquisition at the price paid by Infosys.
“Like any other concerned and logical shareholder of the company, my hope was that the detailed report would contain a full rebuttal of the claims of the whistleblower that I have quoted earlier,” Murthy said. “I was also hoping that the full report would point out gaps in governance and suggest corrective actions. These are the only reasons why I asked for the full report to be disclosed. In the absence of full disclosure, it is difficult to believe that, under the previous board, ‘Infosys has continued to maintain the highest standards of corporate governance that the company is known for’,” said Murthy.
“I am confident Nandan will determine whether the members of the current board who were involved in the events alleged by the whistleblower exercised their proper and expected role in governance, and that he will take appropriate corrective actions. These actions will bring back the rigour of governance standards at Infosys. I would also like to reiterate my confidence in the current senior management of the company, which has several excellent people with whom I have worked. I know the company is in good hands. I wish Nandan the best of everything in his effort to bring back acche din (good days) to Infosys,” he added.
In a tweet on Tuesday evening, Nilekani, 62, who is currently in Boston, thanked Murthy for his support.
“Thank you, Mr. Murthy. I am looking forward to leading @Infosys with unanimous support of all stakeholders!” tweeted Nilekani.
Murthy’s much-anticipated address to investors on Tuesday was made to assuage concerns of large shareholders of Infosys, who have been spooked by the events of the past fortnight’s far-ranging changes at Infosys, with CEO Sikka and chairman Seshasayee quitting and Nilekani returning to the company in the role of non-executive chairman.
“Having worked with Nandan for long, I know that he is a stickler for good corporate governance. As explained earlier, it is this kind of corrective and decisive action that I was looking for in the detailed report. These actions are now being taken. Therefore, we can all move forward from here and look to the future. Now, we can all sleep better knowing that, under his (Nilekani’s) leadership, the corporate governance standard practised by Infosys will be on par with the global best standards,” said Murthy.
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