The country’s second largest software services company Infosys received yet another jolt on Wednesday after an anonymous whistleblower made an appeal to market regulator Securities and Exchange Board of India (Sebi) to probe an agreement made by the tech giant with some of its ex-directors.
Owing to this, Sebi will investigate the issue of a claim release agreement with some previous directors.
According to the letter, such agreements may be a ploy to hide the investigation report from shareholders with regard to previous acquisitions. In the letter, the whistleblower has termed the current board led by Nandan Nilekani, one of the founding members of Infosys, as a ‘huge disappointment’.
“The current board led by Nandan Nilekani is a huge disappointment. He had forgotten the core principles of Infosys and failed to uphold the highest traditions of corporate governance practised by Infosys earlier,” the letter, which Business Standard examined, read.
An Infosys spokespersons declined to comment on the whistleblower’s allegations.
Notably, Infosys' acquisition of Skava and Pannaya under the leadership of its former CEO Vishal Sikka has come under a lot of scrutiny with founding member NR Narayana Murthy raising questions on valuation. Even payment of a hefty severance package to company's former CFO Rajiv Bansal had raised eyebrows among investors.
Last month, one whistleblower had in a letter, raised questions over the company's decision to put Skava and Pannaya on sale after defending the acquisition all along.
In the current letter, the whistleblower claimed that the company had signed a claim release agreement with some ex-directors to hide the outcome of the investigation report.
“The only reason why the company signed such a claim release agreement with the ex-directors is because it found certain wrongdoings in the investigation report,” the letter claimed.
The whistleblower also requested Sebi to investigate why such claim release agreements with some ex-directors were not disclosed to the shareholders immediately after its signing in August 2017.
“Why was such an agreement signed only with three independent ex-directors and not with any other independent former director?” the letter asked.
“Has the investigation report directly or indirectly fixed responsibility on these ex-directors for the wrongdoing related to Bansal’s severance payments and shady acquisition?” it added.
The letter also asked whether these agreements would inhibit the company's ability to release investigation reports to shareholders.
“Time has come for Sebi to order Infosys board to release investigation reports to the shareholders,” the letter read.
Interestingly, the whistleblower’s letter has been sent to Sebi just days after Infosys, in its annual report, billed activist investors as a risk to its business growth.