For Infosys, India’s second-largest IT services company, the woes caused by whistleblowers just don’t seem to end.
In its latest missive, Ethical Employees, a whistleblower group, has allegedly complained to the U.S. Securities and Exchange Commission (SEC) and the Infosys’ board that CEO Salil Parekh was indulging in “unethical practices” to boost short-term revenue and profit.
The group claimed it had recordings and mails to show Infosys was indulging in such practices.
Read: Here is the text of the whistleblower's letter to the Infosys Board and to the US SEC
The e-mail to the board and the SEC is dated September 20, 2019, while another e-mail dated October 3, 2019, had been sent to the U.S. Labour Department’s Office of the Whistleblower Protection Program enclosing “documentary evidence’’ and voice recordings on several allegations made in the earlier e-mail. “We have not sent to the company as our identity would be revealed,” the e-mail to the U.S. Labour Office said.
The complaint alleges that Mr. Parekh bypassed reviews and approvals for large deals. First reported by a financial newspaper, the complaint alleges that Mr. Parekh directed his key employees to make “assumptions” to show margins.
It also claims that the CFO was complicit in the wrongdoing. It alleged that several billion-dollar deals in the last few quarters had a nil margin and asked the company to get deal proposals, margins, undisclosed up-front commitments and revenue recognition checked by auditors.
Panel to vet complaint
“The whistleblower complaint has been placed before the audit committee as per the company’s practice and will be dealt with in accordance with its whistleblowers’ policy.”
The whistleblowers’ allegations talks about how the complainants were asked to not fully recognise visa costs in the quarter and were pressurised into not immediately recognising $50 million in reversals in a contract.
It alleged that Mr. Parekh as well as chief financial officer Nilanjan Roy were pressuring the finance team to show more profit in their treasury management by taking risks and making changes to policies.
In 2017 and 2018, a previous whistleblower had raised questions over corporate governance issues at Infosys.
In an immediate reaction to the whistleblowers’ allegations, the American Depository Receipt (ADR) of Infosys slumped 16% on the Nasdaq exchange in opening trade on Monday.
The ADRs were ruling at $8.90, down 15.84%. On Friday, the ADRs had closed at $10.57.
The Securities and Exchange Board of India (SEBI) had even set up a probe committee to find out whether the allegations were true or not.
Previously, in 2017 and 2018, a whistleblower had raised questions about corporate governance issues at the firm.
After several developments, the then Infosys CEO Vishal Sikka had to step down from office.
