Infosys co-founder N R Narayana Murthy
on Tuesday expressed his disappointment after the company’s board led by Nandan Nilekani
gave a clean chit to former chief executive Vishal Sikka
over allegations of governance failure in the Panaya acquisition.
“I stand by every question on poor governance raised in my speech to Infosys investors dated August 29, 2017. The fact remains that none of these questions has been answered by the Infosys board with the transparency it deserves,” Murthy said in a statement, adding he was “disappointed”.
Nilekani did not respond to calls or text messages seeking comment. Earlier in the day, he said he was not a “spokesperson for Murthy”, when reporters sought his comment on Murthy’s possible reaction to the Infosys board’s observations.
Earlier in the day, the board of India’s second-largest software exporter gave a clean chit to the company’s $200-million Panaya acquisition under Sikka, saying there was no merit in the allegations of wrongdoing. The board also retained Sikka’s growth strategy of software-plus servics model.
A reluctant returnee, Nilekani was forced to take over the reins of Infosys after the investors dumped the stock, erasing nearly Rs 32,000 crore in its market value. This also affected the personal fortunes of Nilekani and other founders who collectively own a 12.75 per cent stake.
Nilekani’s first promise was to bring stability to the company and review dispassionately the report of the independent probe that looked into the acquisition of the Israeli tech firm Panaya and the subsequent severance pay made to former CFO Rajiv Bansal.
Gibson, Dunn & Crutcher and Control Risks, in its report in June, had absolved the management of any wrongdoing, and Infosys made public its excerpts. Murthy had demanded that Infosys make the entire report public.
The board on Tuesday said publishing additional details would affect Infosys’s ability to conduct future probes, besides confidentiality of whistleblowers in any future investigation.
Seshasayee and Sikka had also maintained till their exit in August that there was no wrongdoing in the deal and making the report public would affect the company’s confidentiality. Murthy had objected to this point.
“The core question still is how and why the Infosys board approved an unusual and unprecedented severance payment agreement of 1000 per cent (of the standard Infosys employment contracts) to the former CFO, and why the board did not disclose this information proactively and much earlier,” wrote Murthy in his statement on Tuesday. “Sadly, it appears we will no longer know the truth.”
The fresh outburst did not help Infosys ADR on the New York Stock Exchange, which was trading below 3.61 per cent at $ 14.29 at 22:20 hours India time.
At a press conference earlier, Nilekani had shied away from saying that Sikka got a clean chit, but repeated from a statement that “there is no merit in the allegations of wrongdoing”.
“The investigations were regarding two matters and we have said there was no merit in the allegations,” Nilekani told reporters. “We continue to focus on executing on the theme of software-enabled services and on accelerating growth of our new services portfolio.”
The distraction due to the management and board reshuffle two months ago also forced India’s second-largest software exporter to cut its revenue forecast for the year ahead.
UB Pravin Rao, interim managing director and CEO, said Infosys’s revenue would grow 5.5 to 6.5 per cent in 2017-18, down two percentage points as against the prediction in April. Rao attributed this to “a weak second half”.
After Tuesday’s development, a relieved Seshasayee told Business Standard: “The company deserves to have stability for the sake of its stakeholders. I am happy that the stability is there now.”
Besides Sikka, the firm also lost over a dozen senior executives in a year or so, hurting the company’s business growth.