- Tuesday 12 Nov 2019
Infosys shares tank as probe begins in alleged ‘unethical practices’ by CEO, CFO
Team Udayavani, Oct 22, 2019, 5:02 PM IST
New Delhi: IT services giant Infosys Ltd on Tuesday said it is investigating claims by anonymous whistleblowers accusing CEO Salil Parekh of “unethical practices” to shore up profits through irregular accounting, sending its shares to their worst intraday fall in over six years.
Chairman and co-founder Nandan Nilekani pledged a full probe, saying the complaint had been placed before the audit committee on October 10 and before the non-executive members of the board the next day.
A September 20 letter, signed by “Ethical Employees”, had alleged that Parikh as well as Chief Financial Officer Nilanjan Roy engaged in forced revenue recognition from large contracts not adhering to accounting standards.
Infosys shares plunged over 16 per cent, the most since April 2013. They closed at Rs 639.85 on the BSE, down Rs 127.90 over the previous trading day close.
The letter addressed to the board claimed that recent big deal wins carried negligible margins and that Roy directed certain people to make wrong assumptions to show margins.
The latest allegations came just two years after Infosys endured an internal turmoil that saw its then head Vishal Sikka resigning from the company.
In a statement to stock exchanges, Nilekani said the audit committee has begun consultation with independent internal auditors EY and has retained law firm Shardul Amarchand Mangaldas & Co to conduct an independent investigation.
He said one board member had received two anonymous complaints on September 30, 2019 – one dated September 20, 2019, titled “Disturbing unethical practices” and an undated note with the title “Whistleblower Complaint”.
He said both had been placed before the audit committee on October 10, 2019, and before the non-executive members of the board the following day.
“Post the board meeting of October 11, 2019, the audit committee began consultation with the independent internal auditors (Ernst & Young) on terms of reference for their prima facie investigation. The audit committee has now retained the law firm of Shardul Amarchand Mangaldas & Co (October 21, 2019) to conduct an independent investigation,” Nilekani noted in his statement.
The board, in consultation with the audit committee, will take such steps as may be appropriate based on the outcome of the investigation, he added.
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