Just when it looked like Infosys was settling down under its new board, the spectre of an anonymous whistleblower has returned to haunt India’s second-largest IT outsourcing company.
In a letter to the Securities and Exchange Board of India (SEBI) on May 23, the whistleblower has flagged concerns over the agreements for a mutual release of claims signed between Infosys and its former board members R Seshasayee, Jeffrey Lehman, and John Etchemendy. A mutual release of claims ensures that there are no future legal repercussions after the parties split.
“The only reason why (the) company signed such (a) claim release agreement with those directors is because they found certain wrongdoings in the investigation reports. The release of which will be (a) damning indication on the company and those directors,” the whistleblower said in the letter, a copy of which was reviewed by Quartz.
The letter further asked SEBI to probe why the company had not disclosed these agreements to shareholders at the time of signing and had instead “quietly revealed” the details in its annual report (pdf) for the financial year 2018 released recently.
Infosys refused to comment on the matter. But a former board member confirmed to The Economic Times that this was an unprecedented move. “I am not aware of any such precedent of independent directors signing such an agreement in the past,” said V Balakrishnan, who was also a former Infosys CFO.
Former CEO Vishal Sikka, along with the three board members, had resigned from Infosys in August last year following months of an ugly spat with the company’s co-founders over corporate governance concerns flagged a whistleblower. The then board led by Seshasayee had held an independent probe but found no wrongdoing. However, Infosys founder Narayana Murthy demanded that the findings be made public.
Following these unceremonious exits, Nandan Nilekani, a co-founder and former Infosys CEO, returned to the firm promising to probe all the claims and allegations. However, in October 2017, Nilekani debunked them all, saying it was in the company’s best interests not to make the findings of the report public.
The whistleblower, however, has said that this was a failure of the new board.
“I think, the current board led by Nandan Nilekani is a huge disappointment,” the letter said. “He had forgotten the core principles of Infosys and failed to uphold the highest traditions of corporate governance practiced by Infosys earlier. He is conniving with the current board to quietly bury all the wrongdoings of the earlier board. In doing this he is clearly short-changing the investors of Infosys.”
These new allegations put Infosys back in a tight spot just when it had begun stabilising and gaining back investors’ confidence under its new CEO, Salil S Parekh, who was appointed in December 2017.