Infosys will disclose investigation summary once finished

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Infosys will disclose the summary of investigation once complete and will take corrective action if required, said Infosys Chairman Nandan Nilekani.

In the pre-scheduled analyst meet on November 6, Nilekani, said, “Contents of the investigation is kept confidential. But the validity of complaint is being investigated and remedial steps will be taken.”

Apart from the internal audit committee that is looking into allegations, the company had appointed law firm  Shardul Amarchand Mangaldas to carry out independent investigation and retained agency Ernst & Young for the same.

On November 4, Infosys said in a statement that it was not able to determine the credibility of the allegations in the absence of evidence. However it said investigations by the law firm Shardul Amarchand Mangaldas and Ernst & Young will continue the investigation, it added.

"I don't want to comment on the merits of the allegations. We will want for the investigation to complete," Nilekani said.

However, Nilekani pointed out, contrary to what was being reported, the company had responded responsibly and complied with applicable laws and past practices.

"We have always followed highest level of corporate governance and has set a standard in the last 38 years. Integrity and transparency are the foundation of Infosys. We are hiring people who are inline with our values," he added.

Nilekani also condemned the report of co-founder being involved and said, "Infosys strongly condemns the mischievous insinuations made by anonymous sources against the co-founders and former colleagues, suggesting their involvement in the recent whistleblower allegations."

Business as usual

After Nilekani's speech, Infosys shares jumped 3 percent from Rs 700 at 11 am to Rs 720 around 11.40 am. It was trading at Rs Rs 712 at 1.30 pm.

“In the meantime, everything is being done to keep business as usual. Every day, we are meeting with customers, and the management team is closing deals,” he added. "In fact Salil (CEO) sent an email about a large deal we closed," Nilekani pointed.

Also Read: Even God can't change Infosys' numbers, says Chairman Nandan Nilekani

The analyst meet on November 6 is probably one of the most anticipated events in the light of the recent whistleblower complaint.

Catch Infosys Analyst Meet LIVE

What has happened?

A group of Infosys staffers calling themselves “ethical employees” wrote to the Infosys board and to the US Securities and Exchanges Commission (SEC) in September about the accounting irregularities.

The whistleblowers have made a series of allegations against 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. This was, however, not shared with the firm.

The emails and recordings, the whistleblowers claimed, show that Parekh and Roy window-dressed accounts, insisted that visa costs not be recognised and insisted that key information be concealed from the board and auditors. There are claims that billions of dollars in deals were signed with zero margins and that Parekh referred to two of the independent directors as ‘madrasis’ and one of them as a ‘diva.’

The news caused quite a stir given that it is happening in just two years after former CEO Vishal Sikka’s unceremonious exit in 2017 in a whistleblower complaint.

After the news was made public on October 21, Infosys’ shares fell by 16 percent on October 22 in the BSE and NYSE. In India, it caused a drop of Rs 53,000 crore in investor wealth. Some US-based law firms are now preparing for a lawsuit on behalf of investors in the US.

In the meantime, investigation into the allegations by multiple agencies such as SEC, Securities and Exchanges Board of India and Ministry of Corporate Affairs are underway.