India’s Infosys probes complaints of unethical practices
Infosys said it was investigating allegations of unethical practices raised by whistleblowers, as the Indian outsourcing group’s stock fell as much as 15.9 per cent in early Mumbai trading on Tuesday.
Infosys chairman Nandan Nilekani, who co-founded the company in the early 1980s, said it had retained law firm Shardul Amarchand Mangaldas & Co to look into the allegations.
“These complaints are being dealt with in an objective manner,” Mr Nilekani said in a statement. “We will ensure that the generalised allegations are investigated to the fullest extent.”
In complaints to Infosys’s board and the US Securities and Exchange Commission, seen by the Financial Times, anonymous whistleblowers claimed to have emails and audio recordings allegedly indicating that senior executives oversaw irregular accounting practices in order to boost the company’s short-term financial statements. The whistleblowers said they were current Infosys employees.
Infosys stock fell on the Bombay Stock Exchange when trading opened on Tuesday, weighing on the broader market, which was off 0.4 per cent. In contrast, shares in fellow outsourcers were higher, with Tata Consultancy Services up 0.9 per cent and Wipro up 1.7 per cent.
Infosys’s US-listed shares fell 12 per cent on Monday, when the allegations were first made public. Markets in India were closed on Monday because of local elections.
Infosys said the board’s audit committee was also examining the complaints and that they would be dealt with according to its whistleblower policy.
“The board is committed to uphold highest standard of corporate governance and protect the interests of all stakeholders,” Mr Nilekani said.
In their letter to the SEC, the whistleblowers stated that “as ethical employees, we want to ensure right action”.
Shares in Infosys hit record highs in September but they have retreated since. The group, with annual revenues of $12bn and about 200,000 employees, became one of India’s most high-profile companies and helped revolutionise India’s IT sector by enabling multinationals to outsource their back-office work to the country.
However, Infosys was involved in a public controversy in 2017 after co-founder Narayana Murthy criticised the group’s corporate governance.