October 21, 2019

Infosys Whistleblowers Write To US Securities & Exchange Commission Accusing CEO, CFO Of ‘Unethical Practices’

[ By Bobby Anthony ]


Whistleblower employees at Infosys have written to the United States Securities and Exchange Commission (SEC) as well as the Infosys board, accusing its Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of unethical practices for many quarters.

“Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations,” said the complainants, who called themselves 'ethical employees' in a 2-page letter to Infosys board of directors on September 20.

When there was no response from the board to their letter, an unnamed whistleblower on behalf of the unethical employees on October 3 wrote to the US-based office of the Whistleblower Protection Program, alleging willful mis-statement material accounting irregularities for (the) last two quarters (April-September).

In response, the company in a statement said that the whistleblower complaint had been placed before its audit committee as per the company's practices.

According to the anonymous letter, whistleblowers stated that “In (the) last quarter (July-September), we were asked not to fully recognize costs like visa costs to improve profits. We have voice recordings of these conversations”.

The whistleblower employees have also alleged that in the quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognize reversals of USD 50 million of upfront payment in FDR contract, as it will slash profits for the quarter and negatively affect the company's stock price. The letter said not recognizing reversals of upfront payment in FDR contract was against fair accounting practice.

“Critical information is hidden from the auditors and board. In large contracts like Verizon, Intel and joint ventures in Japan, ABN Amro acquisition, revenue recognition matters are forced which is not as per the accounting standards,” said the letter.

The whistleblowers stated that they have been instructed not to share large deal information with auditors.

The plaintiffs are confident of sharing the alleged emails and voice recordings with investigators when demanded.

“The CEO is bypassing reviews and approvals and instructing sales (teams) not to send mails for approvals. He directs them to make wrong assumptions to show margins,” the unnamed Infoscions stated.

Alleging that the CFO (Roy) was hand in glove with the CEO (Parekh), the whistleblowers stated that the former complied with unethical practices, restraining ethical employees from showing large deal issues to the board during presentations.

“The CEO told us, no one in the board understands these things. They are happy as long as the share price is up. Those two Madrasis (Sundaram and Prahlad) and Diva (Kiran Mazumdar-Shaw) make silly points, you just nod and ignore them,” the letter stated.

Incidentally, Biocon chairperson Shaw happens to be an independent director on the Infosys board.

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