October 23, 2019

BSE Seeks Clarification From Infosys About Why It Was Not Kept Informed About Whistleblower Complaint Beforehand

[ By Bobby Anthony ]


The Bombay Stock Exchange (BSE) has asked for a clarification from Infosys about why the exchange was not kept informed about the whistleblower complaint against the top management of Infosys.

Incidentally, Infosys had informed the BSE in a filing attributed to Infosys Chairman Nandan Nilekani, about its actions taken on the whistleblower complaint.

However, this does not seem to have satisfied the BSE and it has chosen to ask why it was not kept informed about the complaint beforehand.

“It is observed that Infosys has not made any disclosures under Regulation 30 of SEBI (LODR) Regulations, 2015, with reference to receipt of whistleblower complaint mentioned in the announcement,” the BSE said in a release.

Incidentally, as per Regulation 30 SEBI (LODR) Regulations, 2015, it is mandatory for listed entities to disclose any information that, in the opinion of the board, is material and could have an impact on share prices.

Meanwhile, in a related development, there are indications that the Securities & Exchange Board of India (SEBI) may seek clarification from the management of Infosys about charges leveled by whistleblowers.

A series of allegations have been leveled by whistleblowers referring to steps taken by CEO Salil Parekh like resorting to unethical practices to boost short-term profit and downsizing expenses by not recognizing visa cost.

In their letter, whistleblowers 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 mentioned about the management putting immense pressure on them to not recognize reversals of Rs 353 crore of upfront payment in the FDR contract, since it would slash profits for the quarter and negatively affect the company's stock price. Not recognizing reversals of upfront payment in FDR contract was against fair accounting practices, the letter stated.

In a statement on October 21, Infosys had stated that the whistleblower complaint had been placed before the audit committee as per the company's practice.

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