Month after Infosys was hit by whistleblower allegations against its CEO, the IT major announced on Friday that its Audit Committee of the Board of Directors has concluded its independent investigation and concluded that the allegations are substantially without merit.
Infosys said in a statement that the investigation team conducted a detailed analysis that included 128 interviews with 77 persons including relevant company personnel concerned with or mentioned in the allegations. The investigation also included 46 custodians for collection of relevant documents and electronic data and reviewing over 210,000 documents from electronic sources and imaged devices, with over 8 terabytes of electronic data being processed.
Infosys’ Audit Committee Chairperson, D. Sundaram, stated, “The Audit Committee took the anonymous whistleblower complaints very seriously and commissioned a thorough investigation with the assistance of independent legal counsel. The Audit Committee determined that there was no evidence of any financial impropriety or executive misconduct.”
Through the investigation, it was concluded that the allegations regarding treasury policy are unsubstantiated and that company strictly complied with its treasury policy, without any interference or pressure from either the CEO or CFO.
The allegations regarding the visa costs are unsubstantiated. The investigation found that costs incurred towards visas by the company are appropriately accounted for.
In terms of large deal approvals under the investigation team’s review, it was found that they were approved by the necessary stakeholders. In the case of one large deal, a post-facto approval was sought. “The joint ventures were approved by the Board and the Audit Committee. No evidence was found suggesting CEO’s involvement in bypassing the deal approval process or issuing any instructions in this regard,” the company statement read.
The allegations regarding revenue recognition of three large deals/ JVs too, are unsubstantiated.
“Having reviewed this investigation finding, the Company has determined that the reversal/non-accounting of provisions are insignificant and are neither qualitatively nor quantitatively material to the reported revenues or operating margin guidance for the three quarters ended September 30, 2019. The cumulative effect of this would have impacted revenue and operating margins for both FY 19 and for half year ended September 30, 2019 by 0.02% - 0.03%,” the company said in a statement.
It also further noted that allegations of bas accounting practices, exits in the finance team, non-disclosure of key information in the Annual Report and Form 20-F and sharing of incomplete information with analysts and investors are all unsubstantiated.
“While our business is focused on delivering solutions for a changing world, for 38 years our culture and values have remained constant. We’ve been guided by a strong value system and a sense of larger purpose. Our values have driven us to set high standards, behave ethically and with integrity, and to strive for excellence relentlessly. Infosys is a model of strong corporate governance, and the company’s handling of these allegations from start to finish has been consistent with these high standards of governance,” Nandan Nilekani said.
With respect to the allegations that were made against CEO Salil Parekh for issues such as not relocating to Bengaluru, the investigation found that all allegations regarding personal matters of the CEO are without merit.
“The CEO has attended a majority of the Committee and Board meetings during the Period of Review. The Company notes that page 110 of the Annual Report for the year ended March 31, 2019 sets forth the number of meetings attended,” the statement read.
The investigation also found no evidence of personal investments by the CEO in small companies in Mumbai. It also found that the CEO did not use his position for personal gains.
The Audit Committee conducted a thorough investigation with the assistance of independent legal counsel Shardul Amarchand Mangaldas & Co. and PricewaterhouseCoopers Private Ltd. (collectively “investigation team”).