Infosys is talking to two law firms with a view to strengthen the investigation into allegations by whistleblowers.
Infosys is talking to law firms JSA Law and Khaitan & Co with a view to appointing one or both to strengthen the investigation into allegations by whistleblowers against top company executives, people familiar with the development told Moneycontrol.
Infosys also wants to put an end to the recurring problem of whistleblower allegations becoming a public spectacle -- something that has embarrassed the company and worried investors about processes in the organisation.
The likely appointment of a law firm is in addition to the Bengaluru-based software company tasking Shardul Amarchand Mangaldas with leading the investigation into the allegations by whistleblowers who call themselves a group of 'ethical employees'.
The whistleblowers have made a series of allegations against Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy. In addition to writing to the company, the whistleblowers say they have presented evidence to the US Securities and Exchange Commission in the form of recordings and emails.
The emails and recordings, the whistleblowers claim, show that Parekh and Roy window-dressed accounts, asked for visa costs to not be recognised and insisted that key information be concealed from the board and auditors. Other than these, there are claims that billions of dollars in deals were signed with zero margins and that Parekh referred to two of the company's independent directors as ‘madrasis’ and one as a ‘diva.’
Last week, The Economic Times reported that Infosys had appointed audit firm PwC to assist with the investigation.
It is still not clear what the scope of the work will be for the additional law firm/s that may be drafted in.
Moneycontrol has sent emails to JSA Law, Khaitan & Co and Infosys seeking their reactions. This story will be updated as soon as we hear from them.
Infosys has been at the receiving end of negative publicity from whistleblower allegations, which have been leaked to the media. Other than pressuring Infosys’ stock price and making its vaunted processes a subject of speculation, the issue has raised concerns among investors who worry that this pattern will never go away.
“It has been recurring. We are seeing what finality this can be put to rest with,” said a person familiar with investigation.
On November 6, Moneycontrol reported that people at the top echelons of Infosys believe that a cofounder of the company and a former senior executive conspired with the whistleblowers. The company immediately issued a statement denying the story, which Moneycontrol stands by.
Allegations by whistleblowers in February 2017 culminated in the ouster of Vishal Sikka, the first non-founder CEO of Infosys, in August the same year.
In May 2018, a whistleblower complaint to the capital markets regulator Securities and Exchange Board of India alleged that non-executive chairman Nandan Nilekani—who returned to the company he cofounded after requests from other cofounders—was derelict in his duties because of perceived lack of transparency in signing mutual release claims with three directors.
Insider trading not suspected
Executives familiar with the investigation said that the insider trading angle is not something that the company is concerned about.
“No, not suspected,” a source said in response to a question.Infosys’ shares fell by 16 percent on October 22, when the allegations became public, causing a drop of Rs 53,000 crore in investor wealth.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.