Infosys chairman Nilekani says even ‘God’ could not change its numbers
Whistleblowers claim CEO Salil Parekh hid information from the auditors to boost margin.
Last month, ET reported that whistleblowers had mailed the company’s board and the US Securities and Exchange Commission alleging that the company’s CEO Salil Parekh and CFO Nilanjan Roy were using aggressive accounting and hiding information from the auditors in order to boost revenue and margin. The company is being investigated by the US regulator and is facing strong criticism on its handling of the issue. Infosys has appointed Shardul Amarchand Mangaldas to investigate the claims.
“Infosys has strong processes, even God can't change the numbers of this company. Our finance team is feeling insulted by these allegations. But I don’t want to bias the investigation,” Nilekani told analysts at the company’s analyst meet in Bengaluru.
The whistleblowers had alleged that the company was not recognising $50 million in revenue reversals in some deals.
Nilekani also allayed fears that the company’s clients would hold back spending until the issue was resolved. He said Infosys had proactively reached out to customers to allay any concerns.
“Customers are extremely supportive. Customers have faith in Infosys and deal flow continues to be as good as ever,” Nilekani said.
He added that the company was doing everything to run business as usual and that he was grateful to the management for focusing on business.
On Monday, Infosys said that it has not received any ‘prima facie’ evidence to corroborate the whistleblowers allegations of financial malfeasance against its top executives.
The software exporter said its audit committee had begun consultations with the company’s independent internal auditor Ernst and Young even before it retained outside investigators.
“Given the circumstances at this stage, where there is complete absence of prima facie evidence and the Anonymous Complaints are still under investigation, the Company is not in a position to determine the concreteness, credibility and materiality of the anonymous complaints,” the company said in a statement to the National Stock Exchange on Monday evening.
Infosys stock rose 3% following Nilekani's statements on the Bombay Stock Exchange.
In October after the news of the whistleblowers’ complaint broke, Infosys’ shares had plunged over 16% to close at Rs 643.55 on October 22.
In letters shared with ET, it appears that the whistleblowers have shared emails and call recordings to back their claims of financial malfeasance with the US SEC. However this additional information was not provided in the whistleblower letters addressed to the Infosys Board.
Following the receipt of these anonymous complaints, the board discussed the matter during its meeting on October 11. Subsequently on October 21, it appointed law firm Shardul Amarchand Mangaldas and EY to look into the allegations. EY had already been tasked to look into the issue in the previous week.