Despite a clean chit issued by the internal audit committee at Infosys on the allegations made by a whistleblower, the Securities and Exchanges Board of India (SEBI) is going ahead and ordering a forensic audit of the company’s books.
According to a Livemint report, the forensic probe ordered by SEBI may have been due to a parallel development where the company’s stock witnessed a huge build-up of derivatives in the exchange just before the whistleblower complaint became public. Here again, a preliminary enquiry has suggested that there is nothing amiss with these options. The exchange regulator may have thought a forensic audit could absolve itself of any future complaints of inaction on its part.
Matters came to a head in October, 2019, when it became public that a whistleblower complaint was filed with the Securities Exchange Commission (SEC) in the US that the company’s CEO Salil Parikh and a few top finance officials were acting in collusion and are misreporting financial figures. In particular, references were made to the costs incurred on visas and holding back information on expenses incurred to show higher profitability.
The internal audit committee that looked into these allegations completely repudiated all these and gave a point by point explanation that neither the CEO nor any other official was involved in any wrongdoing. In this effort by the committee, law firm Shardul Amarchand Mangaldas and Co., and PricewaterhouseCoopers Pvt. Ltd, were also co-opted to support and assist the committee.
The internal audit committee’s report was then sent to SEBI.
This new development, if true, of the SEBI ordering a forensic audit of Infosys may come as a rude jolt to the management of the IT major, now headed by Nandan Nilekani as the Chairman.
Meanwhile, Infosys posted decent results for the quarter ended December’2019. While the topline increased by close to 8% to Rs 23,092 crore, profits shot up 23.5% to Rs 4,457 crore. The company has moved the forecast for the year to 10-10.5% growth in constant currency.