Infosys shares nosedived nearly 16 per cent on Tuesday, a day after India's second largest IT services company said it had received anonymous whistleblower complaints alleging certain unethical practices. In the complaint, whistleblowers accused Infosys CEO Salil Parekh of leading an effort to shore up profits through irregular accounting. The complaints "have been placed before the Audit Committee as per the Company's practice and will be dealt with in accordance with the Company's whistleblower policy", Infosys said in a regulatory filing on Monday.
Here is what Infosys Chairman Nandan Nilekani said on the matter:
One Board member received two anonymous complaints on September 30, 2019 one dated September 20, 2019 titled "Disturbing unethical practices" and the second undated with the title, "Whistleblower Complaint."
Pursuant to our whistleblower practice we have placed both Complaints before the Audit Committee on October 10, 2019 and before the non-executive members of the Board on October 11, 2019.
These Complaints are being dealt with in an objective manner. The undated whistleblower complaint largely deals with allegations relating to the CEO's international travel to the US and Mumbai.
Additionally, on October 16, 2019 the Company was made aware of a letter dated October 3, 2019 which was purportedly written to the Office of Whistleblower protection program, Washington D.C.
This letter refers to the September 20, 2019 complaint, and to emails and voice recordings in support of the allegations. Although we have not been provided any of the emails or voice recordings, we will ensure that the generalized allegations are investigated to the fullest extent.
Additionally, to ensure independence in these investigations the CEO and CFO have been recused from this matter. Post the Board Meeting of October 11, 2019 the Audit Committee began consultation with the independent internal auditors (Ernst &Young) on terms of reference for their prima facie investigation. The Audit Committee has now retained the law firm of Shardul Amarchand Mangaldas & Co. (October 21, 2019), to conduct an independent investigation.
The Board, in consultation with the Audit Committee, will take such steps as may be appropriate based on the outcome of the investigation. Our statutory auditors, Deloitte India have also been completely updated on this matter post the Board meeting of October 11, 2019.
Because the investigation is ongoing, there will be no further comment so that investigation may be conducted in a thorough and objective manner. At the appropriate time we will provide a summary of the investigations results. The Board is committed to uphold highest standard of corporate governance and protect the interests of all stakeholders.