Name – Ivan Rodrigues Subject – Law
Roll no – M2114 Case Study
INFOSYS
Introduction – Infosys had disclosed that it had received whistleblower complaints alleging certain unethical practices by the top management. US market regulator Securities and Exchange Commission (SEC) had also investigated the matter. “The complaint, which was filed in the Eastern District of New York, was brought on behalf of a class consisting of persons or entities who purchased the company’s publicly traded securities between July 7, 2018, and October 20, 2019, and alleged claims for violations of the US federal securities laws.
Who is Whistleblower ? – Whistleblower, an individual who, without authorization, reveals private or classified information about an organization, usually related to wrongdoing or misconduct. Whistleblowers generally state that such actions are motivated by a commitment to the public interest.
Infosys Company Details – Infosys Limited is an Indian multinational information technology company that provides business consulting, information technology and outsourcing services. The company was founded in Pune and is headquartered in Bangalore. Infosys is the second-largest Indian IT company after Tata Consultancy Services by 2020 revenue figures and the 602nd largest public company in the world according to Forbes Global 2000 ranking.
Case details – New Whistleblower Complaint Accuses Infosys CEO of ‘Unethical Practices’
Indian software services exporter Infosys said it received whistleblower complaints alleging “unethical practices” by its executives. The whistleblowers have alleged that large deal approvals have irregularities and chief executive officer Salil Parekh was bypassing reviews and approvals for large deals. In large contracts like Verizon, Intel, JVs in Japan, ABN AMRO acquisition, revenue recognition matters are forced, which are not as per accounting standards, the whistleblowers also alleged they were asked not to recognise costs like visa costs to improve profits. This quarter there is lot of pressure to not recognise reversals of $50 million of upfront payment in FDR contract, which is against accounting practice, they complained. The whistleblowers have said in board meetings, they were told not to present data on large deals and important financial measures as “it will get board attention”. They said they were also told not to make key disclosures and give incomplete information to analysts and investors.
Outcome of the case – Infosys said it has received a notification from the SEC stating that its investigation has concluded. The company does not anticipate any further action by the SEC on this matter. The Bengaluru-based company said it has responded to all the inquiries received from Indian regulatory authorities and that it will continue to cooperate with the authorities if there are any additional requests for information.
In January this year, Infosys had said its audit committee had found no evidence of financial impropriety or executive misconduct, virtually giving a clean chit to CEO Salil Parekh and CFO Nilanjan Roy who were accused by anonymous whistleblowers of rigging the company’s balance sheet.