Infosys could be in for another round of controversy with the whistleblower who claimed irregularities in the acquisition of Panaya and severance pay to former CFO Rajiv Bansal, asking the regulator, Securities and Exchange Board of India (SEBI), to prosecute the management as well as the board.
He also asked for a full forensic probe into all the allegations. “Why not SEBI order a fully independent investigation including a forensic investigation and make people accountable?” the whistleblower said in a mail to the regulator on Saturday.
Early this week, Infosys, in a notification to BSE, said it has submitted a settlement application to the regulator with regard to issues surrounding the severance package of its former chief financial officer. "The settlement application pertains to matters relating to severance agreement entered into with the former CFO in October 2015," Infosys said in a filing to the stock exchange.
In another development, two former CFOs of Infosys, V Balakrishnan and Mohandas Pai have said that with the Infosys’ move to settle with SEBI the alleged disclosure lapses involving a severance pact, it has vindicated former chairman and co-founder, NR Narayana Murthy’s stand.
Pai said that Infosys owes an apology to Murthy while Balakrishnan said directors, Ravi Venkatesan as well as Rupa Kudva should step down from the board.
"Through the settlement process, the company wants to resolve allegations relating to the Company not seeking prior and separate approval of the Nomination and Remuneration Committee and the Audit Committee in relation to the severance agreement with the former CFO; and in relation to disclosures pertaining to the said severance agreement, cessation of payments and initiation of arbitration under the severance agreement."
Backdoor agreement
Claiming that such a settlement was similar to 'backdoor' agreement, he urged the regulator to prevent such an occurrence. “While I understand it is a norm for large corporates to do backdoor settlements and protect their turf in case of genuine excesses, in Infosys case the regulator should deny that luxury (to Infosys) and make the management accountable in the larger interest.”
The mail said this is perhaps the first time an internal whistleblower had taken upon himself to unravel a 'fictitious' payment to a former CFO as well as an acquisition which was not carried out with full transparency. He said if Infosys is allowed to settle the issue through what he termed as 'back door', then 'no whistleblower in future will take the pain to expose any malpractices in the corporate sector'.
He went on to add that R Seshasayee, the former chairman of Infosys had repeatedly said that the board had not committed any irregularities. He even claimed that the lack of approvals from the board and not recording minutes of the meeting as 'book keeping issues'. The board even instituted probes by multiple law firms who claimed that Infosys had not committed any mistakes. “But the truth is that the investigation was ordered, conducted and directed under the supervision of the same management and board which participated and precipitated such excesses. The conclusions were known before the investigations were ordered. It is a real mockery of justice.”
He said 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 (alone) SEBI should dismiss this settlement overture and prosecute the management and board to set an example.
The whistleblower, on whose mail Infosys conducted a probe earlier said with respect to huge payout to Rajiv Bansal, the former CFO, the key question is why such unprecedented payout was agreed (upon) and under what circumstances such payment was made. Was it a hush money like some had suggested? These are real questions which require answers.
He said why did the company sign a 'non disparaging contract' with the earlier management and protect them as well and what was the reason for not disclosing the ongoing SEBI investigation to the investors.
He wanted the SEBI to order a full independent investigation including a forensic one so that those who have committed fraud are made accountable. “I think if SEBI really wants to clean up the corporate world in India, the Infosys case should be used as a test case,” he pointed out.