Sebi should prosecute Infy board over Panaya, Bansal issue: Whistleblower

The whistleblower says why Sebi is acting differently from NSE case and not ordering a fully independent investigation in Infosys case

A whistle-blower at Infosys has asked market regulator, the Securities and Exchange Board of India (Sebi), to reject the Bengaluru-headquartered information technology (IT) major’s offer to settle the dispute over former chief financial officer (CFO) Rajiv Bansal’s severance pay. Instead, the whistle-blower has sought an independent forensic investigation of the matter.
 
The anonymous whistle-blower, whose email to Sebi was reviewed by Business Standard, also blamed the Infosys board, currently led by co-founder Nandan Nilekani, for dismissing the allegations. “It is a mockery of justice,” the whistle-blower, who claims to be an Infosys employee, has written.
 
“The impunity with which the board — both past and present — dismissed the allegations when they knew they were wrong is unprecedented and just for this reason Sebi should dismiss this settlement overture and prosecute the management and board to set an example,” the letter claims.
 
The whistle-blower drew parallels to allegations of fraud at the National Stock Exchange, which was investigated by the company-appointed panel and got a clean chit.
 

“The current (NSE) management filed for [a] consent [plea], but Sebi is not accepting that and asking for special investigation. Why Infosys case should be different from the NSE case? Why not Sebi order a fully independent investigation including a forensic investigation and make people accountable?” said the letter.
 
An Infosys spokesperson said the company has not seen the letter.
 
In February, the petition by an anonymous whistle-blower to Sebi, alleging irregularities in the acquisition of Israeli technology firm Panaya by Infosys and the subsequent severance pay to Bansal triggered at least two independent investigations. Both gave a clean chit to former chief executive officer Vishal Sikka and the company.
 
However, Infosys founder N R Narayana Murthy, who had made public his outrage against the failure of Infosys in disclosing the severance pay to shareholders and regulators, wanted the report to be made public.
 
Infosys declined, saying there were confidential details in the report.
 
The public pressure from Murthy made Sikka quit the company in August. Following this, the board, led by then chairman R Seshasayee, engaged in a public spat with Murthy. Seshasayee and two other board members also ended up quitting the company.
 
As investors fled Infosys after a failed three-year experiment with its first non-founder CEO and the subsequent uncertainty, several board  members, investors, and former employees reached out to a reluctant Nilekani to return to the company.
 
One of the commitments made by Nilekani, who returned as non executive chairman, was to look at the probe reports dispassionately and offer his views.
 
In October, he gave a clean chit to Sikka and declined to make the probe report public, citing confidentiality reasons. On December 2, Infosys named Salil S Parekh, a former Capgemini executive, as the next CEO.
 
On Wednesday, Infosys approached Sebi with a consent plea to settle allegations of disclosure lapses on Bansal’s severance pay, which analysts and former Infosys employees said was an admission of guilt.
 
The latest salvo at Infosys comes at a time when two former board members, T V Mohandas Pai and V Balakrishnan, have asked Infosys to apologise to founder Murthy and also sought the exit of board members who took the previous decisions. Balakrishnan told PTI that Ravi Venkatesan and Roopa Kudva should resign.
 

Some board members tried to respond to the building pressure.
 
“I hope you recall that procedural lapses were admitted when Seshasayee apologised at (the) AGM. Settlement is to pay fine for unintended procedural lapses,” tweeted Kiran Mazumdar-Shaw, an Infosys board member, and chairman and managing director of Biocon.
 
She was responding to a query on the microblogging platform whether she would resign from the Infosys board. The whistle-blower’s letter to Sebi said future disclosures on any wrongdoing could potentially not be exposed if Infosys is let off the hook now. “This is the first time an internal whistle-blower took pain to unravel a fictitious payment to an ex-CFO and a suspicious acquisition with personal conflicts attributed to senior management. If this case is settled through the backdoor then no whistle-blower in the future will take the pain to expose such things,” the letter said.