Infosys shares tank 16 per cent on whistleblower complaint
Nandan Nilekani says CEO and CFO have been recused from the matter to ensure independent investigations
New Delhi: Shares of IT services firm Infosys on Tuesday plummeted nearly 17 per cent, wiping Rs 53,451 crore from its market valuation, on concerns over a whistleblower complaint which alleged that two top executives of the firm were indulging in unethical practices to increase short-term revenue and profits.
The scrip tanked 16.21 per cent to close at Rs 643.30 on the BSE. During the day, it tumbled 16.86 per cent to Rs 638.30, the most since April 2013. On the National Stock Exchange, it plunged 16.65 per cent to close at Rs 640. The sharp fall in the scrip wiped out Rs 53,450.92 crore from the firm’s market valuation which now stands at Rs 2,76,300.08 crore.
According to reports, a complaint by a group that calls itself ‘Ethical Employees’ has alleged CEO Salil Parekh and CFO Nilanjan Roy were indulging in “unethical practices” to boost short-term revenue and profits.
The letter addressed to the board claimed that recent big deal wins carried negligible margins and that Roy directed certain people to make wrong assumptions to show margins. The whistleblowers said they have emails and voice recordings on these matters. Infosys said the whistleblower complaint has been placed before the Audit Committee as per the company’s practice.
A second complaint
Infosys Chairman Nandan Nilekani, in his statement on Tuesday, said the company was made aware of another letter (dated October 3) that was purportedly written to the Office of Whistleblower protection program, Washington DC. This letter referred to the September 20, 2019, complaint, and to emails and voice recordings in support of the allegations.
“Although we have not been provided any of the emails or voice recordings, we will ensure that the generalised allegations are investigated to the fullest extent. Additionally, to ensure independence in these investigations, the CEO and CFO have been recused from this matter,” Nilekani said.
Not the first scandal
The latest allegations came just two years after Infosys endured an internal turmoil that saw its then head Vishal Sikka resigning from the company.
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