Infosys hit by ‘unethical practices’ charge
NEWDELHI: An anonymous group claiming to be employees of information technology (IT) company Infosys has written to the company’s board accusing chief executive Salil Parekh and chief financial officer Nilanjan Roy of indulging in “unethical practices” to boost short-term revenue and profits.
“We have high respect for all of you and bring to your notice the unethical practices of CEO in recent quarters. Same measures are taken up in the current quarter also to boost short term revenue and profits,” the letter addressed to the board of directors dated September 20, read.
Calling themselves “ethical employees”, the “whistle-blowers” have said that they have emails and voice recordings on these matters.
“We hope the board will conduct immediate investigation and take action,” they added.
The Bengaluru-headquartered Infosys said the whistleblower complaint has been placed before the audit committee as per the company’s practice.
“The whistle-blower complaint has been placed before the audit committee as per the company’s practice and will be dealt with in accordance with the company’s whistle-blowers policy,” it said in a statement.
The whistle-blowers have also written to the Us-based office of the Whistleblower Protection Programme on October 3, alleging willful misstatement and accounting irregularities for the last two quarters. Stating that in the last quarter, they were asked not to fully recognise costs like visa costs to improve profits, the whistle-blowers have claimed: “We have voice recordings of these conversations. When auditor opposed, the issue was postponed ...This quarter, there is lot of pressure to not recognise reversals of $50 million of upfront payment in FDR contract, which is against accounting practice. As this will reduce profits for the quarter and negative for stock price, they are putting pressure not to take the charge,” they claimed.
Alleging that “critical information” is hidden from the auditors and the board, the letter claimed that in large contracts like Verizon, Intel and joint ventures in Japan, ABN Amro acquisition,“revenuerecognitionmatters are forced which are not as per accounting standards”.
“Large deal approvals have irregularities. The CEO is bypassing reviews and approvals and instructing sales not to send mails for approval. He directs them to make wrong assumptions to show margins. CFO is compliant and he prevents us from showing in board presentations large deal issues,” they further alleged.
Us-listed shares of Infosys were down 15.7% at $8.91 in premarket trading on the NYSE. Indian markets were closed on Monday for a holiday.
US-LISTED SHARES OF INFOSYS WERE DOWN 15.7% IN PREMARKET TRADING ON THE NEW YORK STOCK EXCHANGE