Global software vendor Infosys said on Monday, November 4, it found no evidence to prove the allegations of unethical practises by the company's Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy, sending its shares up by 5 percent in morning trade.
In a letter to the National Stock Exchange dated November 2, the company said the anonymous complaints were still under investigation and it was not in a position to determine "concreteness, credibility and materiality of complaints."
Infosys said last month that the US Securities and Exchange Commission (SEC) had launched a probe into whistleblower claims that the Indian software services firm used 'unethical practices' to boost revenue and profit.
The whistleblower group had reportedly sent the allegations to SEC as Infosys is listed on New York-based bourse Nasdaq.
A few anonymous employees had sent a two-page letter to the company's board of directors on September 20. "Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations," the letter read.
The letter accuses the top management of changing investment and accounting policies for short-term profits. It also accuses the management of bypassing the board and auditors to escape scrutiny.
Infosys' own audit committee had also started consultations with independent internal auditor, Ernst & Young (EY). The company had appointed law firm Shardul Amarchand Mangaldas for a separate probe into the case. Sebi may direct Infosys to share the probe report with it.
Course of action
After getting no response from the board, the whistleblower group wrote to the US-based office of the Whistleblower Protection Programme on October 3, alleging willful misstatement material accounting irregularities for (the) last two quarters (April-September). In response, the $11.8-billion company in a statement said the whistleblower complaint had been placed before the audit committee as per the company's practices.
Infosys Chairman Nandan Nilekani had said later in October that the company was investigating the allegations. Infosys said it placed the complaints received in September before the audit committee on October 10, and before the non-executive members of the board on October 11.
The complaints are being dealt with in an objective manner, with the CEO and Chief Financial Officer Nilanjan Roy recused from the matter, it added.
The audit committee had retained the law firm of Shardul Amarchand Mangaldas & Co to conduct an independent investigation, and the company's board would to take appropriate steps based on the outcome of the investigation, the company said.
(With agency inputs.)