IT major Infosys saw its worst day on the bourses in over six years on Tuesday as investors pulled out their funds over recent corporate governance issues. Its scrips settled nearly 17 per cent lower despite assurances from the company top brass.
The impact of the sharp sell-off was seen far and wide. Life Insurance Corporation (LIC), which holds a 5.85 per cent stake in the company with a total of 25.13 crore stocks, saw its share prices falling over 3 per cent on the BSE.
The index of 10 IT companies, Nifty IT slipped over 741.40 points or 4.81 per cent, with Wipro and NIIT Technologies being the only companies to end in the green.
Some anonymous Infosys employees have written to the company board accusing its Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of being involved in unethical practices for several quarters.
In a 2-page letter sent to the IT behemoth's board of directors on September 20, the complainants said that in a quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognise reversals of $50 million (Rs 353 crore) of upfront payment in FDR contract, as it will slash the company's profits for the quarter and negatively affect its stock price.
"Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations," they said.
Information hidden from auditors
The complainants, who called themselves 'ethical employees', said they have been instructed not to share large deal information with the auditors.
"Critical information is hidden from the auditors and board. In large contracts like Verizon, Intel and JVs (Joint Ventures) in Japan, ABN Amro acquisition, revenue recognition matters are forced, which is not as per the accounting standards," said the letter.
Nilekani on Tuesday tried to assuage angry investors by assuring that the company will ensure that the allegations are investigated to the "fullest extent".