Infosys, whistleblowers and an issue that refuses to die2 min read . Updated: 24 Oct 2019, 06:21 PM IST
- From alleged visa fraud to malpractices, a cloud of questionable internal practices hangs heavy over the IT firm
- In 2013, Infosys had to make a $35-million settlement with US authorities over an alleged visa fraud, which was reported to the authorities by former employee Jack Palmer
MUMBAI : For the third time in six years, a cloud of questionable internal practices hangs heavy over Infosys Ltd, once seen as the paragon of corporate virtue in India. And yet again, it’s an internal whistleblower who has set off a chain reaction.
In the latest instance, an anonymous group called ‘Ethical Employees’ has complained to the Infosys board and the US Securities and Exchange Commission (SEC), alleging accounting jugglery to boost short-term revenue and profits. The veracity of the complaint itself notwithstanding, the issue points to the company’s struggle with whistleblowers and corporate governance standards.
In 2013, Infosys had to make a $35-million settlement with US authorities over an alleged visa fraud, which was reported to the authorities by former employee Jack Palmer. Palmer had filed the whistleblower lawsuit alleging Infosys was deliberately flouting US visa rules to facilitate visits of its Indian employees on short-term B1 visas in February 2011. B1 visas are essentially meant for employees who are travelling to consult with associates, or attend training or conventions. They do not allow full-time employment in the US. While the US federal court, hearing the case, subsequently dismissed Palmer’s lawsuit, the allegations did spur a federal investigation into visa practices at Infosys.While the Indian software company hotly contested the allegations, it did, however, agree to the settlement subsequently.
In August 2017, Vishal Sikka who had taken over the reins at Infosys in 2014 replacing then CEO S.D. Shibulal, one of Infosys’s founders, had to exit after a whistleblower complaint pointed to alleged malpractices by the top management related to Infosys’s acquisition of Panaya, an Israeli software company.
It was alleged that relatives of top Infosys officials had invested in Panaya although they did not do it directly.
The relatives had invested through a fund which then further invested the money in Panaya and made significant returns when Panaya was bought by Infosys in 2015.
Soon after the allegations became public, Infosys CFO Rajeev Bansal left the organization and was offered a severance package that drew accusations of ‘hush money’ due to the timing of Bansal’s departure and circumstances preceding it.
Eventually, Infosys co-founder N.R. Narayana Murthy publicly called upon the company management to come clean on the allegations and insisted that Infosys provide a detailed and exhaustive explanation pertaining to the Panaya deal.
Infosys has since then launched three separate investigations into the Panaya deal, but none of these independent probes have established any wrongdoing on Infosys employees who were named in the whistleblower letter.
However, Sikka left the company and co-founder Nandan Nilekani took over as chairman.
In January 2018, Salil Parekh from Capgemini was appointed as the CEO and MD of Infosys, where he was previously a member of the group management board since 2000.