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Whistle-blower Allegations At Infosys – Free PDF Download

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Published On October 23rd, 2019 Leave a comment

Table of Contents

WHAT EXACTLY HAPPENED?

An anonymous group calling itself “ethical employees” has complained to the board of Infosys and the US Securities and Exchange Commission (SEC)
Alleging that the company is taking ‘unethical’ steps to boost short-term revenue and profits.
It also stated that the complainants have emails and voice recordings to substantiate the claims.

ALLEGATIONS ON WHOM?

The letter has pointed to multiple instances of unethical practices by CEO Salil Parekh and CFO Nilanjan Roy.

Chief Executive Officer (CEO) is the highest-ranking position in a company who oversees the entire company.
The Chief Financial Officer (CFO) oversees all the financial aspects of the company.

WHAT ARE THE ALLEGATIONS?

CEO Salil Parekh is bypassing reviews and approvals for large deals.
He (Parekh) directs them to make wrong assumptions to show margins.
CFO is compliant and he prevents us from showing in board presentations large deal issues.
Several billion-dollar deals of last few quarters have nil margin.
Complainants were asked to not fully recognise visa costs in the quarter.
They were pressured to not immediately recognise $50 million in reversals in a contract.
In large contracts like Verizon, Intel, JVs in Japan, ABN AMRO acquisition, revenue recognition matters are forced, which are not as per accounting standards.
CEO, and CFO were pressuring the finance team to show more profits in their treasury management ‘by taking risks and making changes to policies’.

WHAT INFOSYS SAID ON THIS?

Infosys is examining the charges made by the whistleblower.
The whistleblower complaint has been placed before the Audit Committee as per the company’s practice.
It will be dealt with in accordance with the company’s whistleblowers’ policy.

The chairman heads up the board of directors for a company. A board of directors is a group of individuals elected to represent shareholders.
The CEO runs the company but the CEO is appointed by the board.

IMPACT OF WHISTLE-BLOWER COMPLAINT?

The charges wiped more than $7 billion off the company’s market value in a single day.
The company’s American Depository Receipts (ADRs) listed on the New York Stock Exchange or NYSE also fell over 15%.