A few anonymous employees of global software giant Infosys have accused its Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of unethical practices for many quarters.
According to the reports, the Infosys has been hit by a major controversy after an anonymous group of employees, who calls themselves as ‘ethical employees’, alleged that the firm has been dressing up its books to show better revenue and profit numbers.
In a letter to the Infosys board and the US Securities Exchange Commission (SEC), the ‘ethical employees’ targetted CEO Salil Parekh while pressurising the finance team to take a number of steps that go against standard accounting practices.
“We are Infosys employees and we have emails and voice recordings on these matters. We hope the board will conduct an immediate investigation and take action,” they said.
“Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations,” said the complainants, who called themselves ‘ethical employees’ in a 2-page letter to the city-based IT behemoth’s board of directors on September 20.
The employees alleged irregularities in large deals like Verizon, ABN Amro and a joint venture in Japan, saying revenue recognition was not as per accounting standards.
“Large deals have irregularities. CEO is bypassing reviews and approvals and instructing sales not to send mails for approval… Several billion-dollar deals of the last few quarters have nil margins. Please ask auditors to check deal proposals, margins and undisclosed upfront commitments made and revenue recognition. All information is not shared with auditors,” the letter read.
The letter alleged they were asked not to fully recognise costs like visa costs to improve profits in the last quarter. “We have voice recordings of these conversations. When auditor opposed, the issue was postponed.”
The letter further stated that important metrics on large deals and other financial information was suppressed to avoid the board’s attention. “CEO and CFO are asking us to show more profits in treasury by taking up risks and make changes to policies. This will provide short term profits. They ask us not to make any key disclosures in 20F and annual reports and to share good and incomplete information with investors and analysts. This is a regulatory issue. We have email and voice recordings and will share during the investigation. Whoever disagrees is sidelined …In a large finance team, important employees have left due to pressure to make the deal look good,” the employees said.
In response, Infosys in a statement on Monday said the complaint has been placed before the audit committee as per the company’s practices. “The complaint will be dealt with in accordance with the company’s whistleblowers policy,” Infosys said in the statement.
This post was last modified on October 22, 2019 8:43 am