The audit committee of Infosys, the second largest IT services company, has given clean chit to its chief executive officer Vishal Sikka and other directors after its investigation revealed that there was no financial impropriety as complained by two anonymous letters written by whistleblowers in February this year.
The two anonymous letters in February this year made serious allegations against the Infosys management which talked about improper payment in the acquisition of two companies – Panaya, Skava and also the excessive expenditure incurred by CEO Vishal Sikka. Both the letters were forwarded to the market regulator SEBI.
Gibson Dunn & Crutcher, a US based law firm and Control Risks, a consulting firm conducted the investigation. “We found no evidence whatsoever to support any of the new allegations in the complaints regarding wrongdoing by the company or its directors and employees, and those allegations were rebutted by substantial and credible evidence,” Gibson said in a statement.
The anonymous letter had alleged that Infosys had paid excess money for the acquisition of Panaya and Skava in 2015 in return for certain kickbacks with fingers pointing against the top management. Panaya was acquired for $200 million while it paid $120 million for Skava.
“As described in detail during our discussion with the Audit Committee, we found no evidence whatsoever to support any of the new allegations in the complaints regarding wrongdoing by the company or its directors and employees, and those allegations were rebutted by substantial and credible evidence,” the company said.
The company stated that there is no evidence that the CEO received excessive variable compensation or incurred unreasonable expenses for security, travel and the Palo Alto office. “We also concluded that Cyril Amarchand Mangaldas (CAM) in 2015 and 2016 previous investigations were thorough and that their findings and conclusions were reasonable and credible based on the evidence,” the company said.
Besides the international law firm Gibson Dunn & Crutcher, LLP, the audit committee sought the expertise of Control Risks, a risk consultancy specialising in expert analysis and in-depth investigations, to come up with the report.
It also appointed the Indian law firm Khaitan & Company to provide legal counsel on Indian law matters. The anonymous whistleblower also wanted an investigation into the CEO’s improper deals made with customers. Besides saying the mergers and acquisitions team acted without securing proper approvals, the whistleblower also pointed a finger on the CEO receiving inappropriate compensation and incurred excessive expenses relating to travel, security and the Palo Alto office.
The company states that Gibson Dunn and Control Risks have now completed their detailed and extensive Independent Investigation. Infosys also states that it has also fully cooperated with all requests for information from SEBI regarding the anonymous complaints.
“ We found no evidence supporting the whistleblower’s allegations regarding the acquisitions – there were no conflicts of interest or kickbacks, required approvals for the acquisitions were obtained, thorough due diligence was conducted, the valuations of the target companies done by an outside financial advisor were reasonable, and the purchase prices were within the range of values determined by that advisor,” Infosys said.
The investigating firms also reviewed the two previous investigations completed by Indian law firm CAM in 2015 and 2016 on the allegations relating to the departure of the former CFO.
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