Infosys CEO, CFO accused of 'unethical practices' to boost profits
What's the story
A group of anonymous employees of the IT giant Infosys has accused the firm's CEO Salil Parekh and CFO Nilanjan Roy of "unethical practices" in a bid to boost short-term revenue and profits. The group, calling itself the "ethical employees," made the allegations in a letter addressed to the board of directors at Infosys and claim to have proof of their allegations. Here's more.
Details
Group accused CEO of violating standard accounting practices
In the two-page letter, dated September 20, the "ethical employees" accuse Parekh of opting for several measures that violate standard accounting practices, according to The Times of India. Claiming to have proof, the group stated, "We are Infosys employees and we have emails and voice recordings on these matters. We hope the board will conduct an immediate investigation and take action."
Quote
'We were asked not to fully recognize costs'
The group stated, "In last quarter, we were asked not to fully recognize costs like visa costs to improve profits." Alleging irregularities in large deals like Verizon, ABN Amro and a joint venture in Japan, the group added, "CEO is bypassing reviews and approvals and instructing sales not to send mails for approval... Several billion-dollar deals of last few quarters have nil margins."
CFO's role
Whistleblowers allege the CFO was complicit
Further, the group alleged that CFO Nilanjan Roy was complicit in these "unethical practices" and prevented them from disclosing issues with large deals in board presentations. The group wrote in the letter, "CEO and CFO are asking us to show more profits in treasury by taking up risks and make changes to policies. This will provide short-term profits."
Demeaning board
CEO allegedly demeaned board; said they didn't understand operations
The whistleblowers also alleged that the CEO demeaned the board claiming, "CEO told us, 'No one in the Board understands these things, they are happy as long as share price is up.'" They quoted the CEO as saying, "Those two Madrasis (Sundaram and Prahalad) and Diva (Kiran) make silly points, you just nod and ignore them." They claimed to have voice recordings of this.
Action
Whistleblowers' complaint placed before audit committee: Infosys
The whistleblowers urged the board to take action and stated that they will bring forth the evidence once an investigation is underway. Infosys told TOI that the whistleblowers' complaint has been placed before an audit committee as per the company's practice. The firm said that the complaint will be dealt with as per its whistleblowers' policy.