IT major Infosys' troubles don't seem to be ending anytime soon. After the whistle-blower letter against its CEO Salil Parekh took down the stock as much as much as 17 percent, sources suggest that market regulator SEBI might look to intervene in the matter.
The Securities and Exchange Board of India (SEBI) may seek clarification from Infosys' management on charges level levelled by the whistle-blower.
Unnamed whistle-blowers on behalf of employees wrote to the US-based office of the Whistleblower Protection Program on October 3 alleging wilful misstatement and material accounting irregularities for the last two quarters (April-September)
Series of allegations were levelled by the whistle-blower referring to steps taken by Parekh like resorting to unethical practices to boost short-term profit and downsizing expenses by not recognising visa cost.
The whistle-blowers in their letter claimed, "Critical information is hidden from the auditors and board. In large contracts like Verizon and Intel, joint ventures in Japan, and ABN Amro acquisition revenue recognition matters are forced, which is not as per the accounting standards.’’
The letter also mentions about the management putting immense pressure on them to not recognise reversals of Rs 353 crore of upfront payment in the FDR contract, as it would slash profits for the quarter and negatively affect the company's stock price. Not recognising reversals of upfront payment in FDR contract was against fair accounting practice, they stated.
In a statement on October 21, Infosys said the whistle-blower complaint had been placed before the audit committee as per the company's practice.
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