Infosys Ltd chairman Nandan Nilekani on Tuesday said the whistleblower complaints are “being dealt with in an objective manner". The complaint, which the company disclosed on 21 October, has accused the company’s chief executive officer and chief financial officer of unethical accounting practices.
On Tuesday, the stock slumped 16%, marking its biggest single-day fall since 12 April, 2013, and touched a low of ₹645 -- a level last seen on 26 December, 2018.
Infosys said in a statement that on 16 October, the company was made aware of a letter dated 3 October, which was purportedly written to the Office of Whistleblower protection program, Washington D.C. The letter refers to the 20 September complaint, and to emails and voice recordings in support of the allegations. However, the anonymous group that calls itself “ethical employees" stated in its complaint to the board of Infosys and the US Securities and Exchange Commission (SEC) that the complainants have emails and voice recordings to substantiate the claims.
Infosys said it has not received any of the emails or voice recordings, and will ensure that the generalised allegations are investigated to the fullest extent. “Additionally, to ensure independence in these investigations, the CEO and CFO have been recused from this matter," Nilekani said in the statement.
Post the board meeting on 11 October, the Audit Committee began consultation with the independent internal auditors Ernst &Young on terms of reference for their prima facie investigation. The Audit Committee has now retained the law firm of Shardul Amarchand Mangaldas & Co. (21 October), to conduct an independent investigation.
The board, in consultation with the Audit Committee, will take appropriate steps based on the outcome of the investigation. “Our statutory auditors, Deloitte, India have also been completely updated on this matter post the Board meeting of October 11, 2019," Nilekani said.
With investigation on, “there will be no further comment so that investigation may be conducted in a thorough and objective manner. At the appropriate time, we will provide a summary of the investigations results. The board is committed to uphold highest standard of corporate governance and protect the interests of all stakeholders".
Analysts feel while the issue is severe, it is not limited to Infosys. “Everyone in the industry takes short cuts and nobody is foolproof. But since this is the second time for Infosys, they need to handle this in a much more transparent manner by hiring credible third party experts who can question the obvious. This surely points to the need for more structural reforms within the company," said Sanchit Vir Gogia, chief analyst, Greyhound Research.
An anonymous letter sent to the company’s board and the US Securities and Exchange Commission has alleged suppression of information related to visa costs to show higher profits and keep Infosys’s stock price buoyant. The complainants also contend they were pressed not to record reversals of contractual payments to the company worth $50 million.