Sebi Ex­am­in­ing Letter from Infy Whistle­blower

Letter com­plained against CEO and board of di­rec­tors

The Economic Times - - Front Page - Reena.Zachariah@ times­

is­sues over sev­er­ance pay­out to for­mer CFO Ra­jiv Bansal and ac­qui­si­tion of Panaya

sug­ges­tions to take suo moto ac­tion on cor­po­rate gov­er­nance is­sues raised by In­fosys’ founders mon­i­tor­ing de­vel­op­ments at In­fosys and will seek a re­sponse from it on is­sues raised by the letter Mum­bai: The Se­cu­ri­ties and Ex­change Board of In­dia is ex­am­in­ing a re­cent letter from a whistle­blower at In­fosys com­plain­ing against the com­pany’s CEO Vishal Sikka and the board of di­rec­tors.

Sebi will seek a re­sponse from In­fosys on sev­eral is­sues raised on the sev­er­ance pay­out to for­mer chief fi­nan­cial of­fi­cer Ra­jiv Bansal and the ac­qui­si­tion of Panaya. “We will ex­am­ine the re­sponse from the com­pany on the letter Sebi has re­ceived and see if there is any vi­o­la­tion of se­cu­ri­ties laws,” said a se­nior reg­u­la­tory of­fi­cial. “We are closely mon­i­tor­ing the de­vel­op­ments.”

The letter, marked to the Sebi chair­man, says Bansal was a key man­age­ment per­son­nel (KMP) and any con­tract mod­i­fi­ca­tion had to be ap­proved by In­fosys’ au­dit com­mit­tee.

It al­leges that Sikka agreed to a huge pay­out with­out any for­mal board ap­proval, clear­ance from the au­dit and com­pen­sa­tion com­mit­tees or the share­hold­ers. The letter also al­leges that Bansal got 30 months’ salary though his con­tract stip­u­lated a pay­out of only three months.

The letter said Sebi rules re­quire trans­ac­tions in­volv­ing key man­age­ment per­son­nel to be dis­closed as soon as they are en­tered into. Be­sides, the au­dit com­mit­tee has to men­tion any rea­son for a non-arm’s length trans­ac­tion. The board’s cor­po­rate gov­er­nance re­port, given out on a quar­terly ba­sis, should have dis­closed de­tails of this trans­ac­tion. The letter pointed out that the re­port for the said pe­riod did not men­tion any de­tails of Bansal’s pay­out.

“The com­pany takes any whistle­blower com­plaint se­ri­ously and there is a due process to in­ves­ti­gate any com­plaint that comes to us. If we do re­ceive any query ei­ther di­rectly or from the reg­u­la­tor, we will re­spond to it as per the due process,” an In­fosys spokesper­son said.


In­fosys has been fac­ing se­vere crit­i­cism since re­veal­ing in May 2016 the de­tails of the sev­er­ance pay­out to Bansal. The com­pany said it would pay him Rs 17 crore, much more than stip­u­lated in Bansal’s em­ploy­ment con­tract. The pay­ment, un­prece­dented in In­fosys his­tory, is a sig­nif­i­cant part of founder NR Narayana Murthy’s claims that gov­er­nance at the com­pany has fallen.

While In­fosys an­nounced that Bansal was leav­ing in Oc­to­ber 2015, the sev­er­ance was only dis­closed in May 2016. To be sure, In­fosys even­tu­ally paid Bansal a lit­tle over .₹ 5 crore and sus­pended the rest of the pay­out af­ter an out­cry at its an­nual gen­eral body meet­ing.

Murthy, in an in­ter­view to ET, said the pay­out could have the ap­pear­ance of ‘hush money’. In­fosys has vig­or­ously con­tested that char­ac­ter­i­sa­tion.

“In the case of Bansal’s sev­er­ance, due process was fol­lowed, nec­es­sary ap­provals were taken and dis­clo­sures were made. There was no im­pro­pri­ety or ‘hush money’ in­volved,” Roopa Kudva, in­de­pen­dent di­rec­tor at In­fosys, had told ET.

On Mon­day the com­pany said it had learned from the in­ci­dent and is cre­at­ing a pol­icy for sev­er­ance. “There will be no more Ra­jiv Bansals,” chair­man R Se­shasayee said at the press con­fer­ence.


The Panaya deal, which was the first ac­qui­si­tion by In­fosys un­der Sikka, has also been ques­tioned. ET has re­ported that Bansal was not in favour of the trans­ac­tion. A se­nior for­mer em­ployee, privy to the Panaya de­vel­op­ments, said the Is­raeli com­pany was on the verge of shut­ting down, and a num­ber of peo­ple were laid off be­fore the buy­out. In­fosys paid six times Panaya’s rev­enue for the ac­qui­si­tion, as de­clared by Bansal to an­a­lysts in the earn­ings call at the time of the an­nounce­ment.

Based on the re­sponse, Sebi will see if there has been any vi­o­la­tion of se­cu­ri­ties laws

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.