An anonymous employee group, named as 'Ethical Employees', in a complaint to the board of Infosys Limited and the US Securities and Exchange Commission (SEC), has written an explosive letter, accusing the domestic tech giant of indulging in 'unethical' practices to generate more profit and revenue. The group has also accused company Chief Executive Officer Salil Parekh of bypassing reviews and approvals to get bigger deals. These employees, in the letter dated 22 September 2019, claim they have voice recordings of the CEO and the CFO to prove their case.
Meanwhile, the company in a statement, has said it's investigating the charges. "The whistleblower complaint has been placed before the Audit Committee as per the company's practice and will be dealt with in accordance with the company's whistleblowers' policy," Infosys statement said.
Here are the allegations of the anonymous employee group
'Don't recognise full costs'
The group claims the company asked them not to "fully recognise costs like visa costs" to earn more profit. It added that when the auditor pointed it out, the issue was postponed by the company. "This quarter there is a lot of pressure to not recognise reversals of $50 million of upfront payment in FDP contract, which is against accounting practice," the group alleged.
'Infosys hiding critical information from auditors'
The group alleged Infosys was hiding critical information from auditors and the company board. The group accused the company of asking them not to share such information with auditors. "In large contracts like Verizon, Intel and JVs in Japan, ABN Amro acquisition, revenue recognition matters are a force, which is not as per accounting standards," the letter stated.
'Salil Parekh prevents us from highlighting issues in board meets'
They have accused Salil Parekh of "bypassing reviews and approvals and instructing sales department of the company not to send approval". "He directs them to make wrong assumptions to show margins. CFO is compliant and he prevents us from showing in board presentations large deal issues."
The letter also quotes Parekh making alleged controversial remarks against two board members - DN Prahlad and D Sundaram.
The group says the CEO had told them that "no one in the board understands these things, they are happy as long as the share price is up. Those two Madrasis (Sundaram and Prahalad) and Diva (Kiran) make silly points, you just nod and ignore them".
'Show more profits in treasury'
The group said they were prevented from sharing data on large deals and important financial measures during board meetings. "CEO and CFO are asking us to show more profits in treasury by taking up risks and make a change to policies. This will provide short-term profits," the group alleged.
'Share only good information with analysts'
The group said the company has asked them not to make key disclosures in 20F and annual report and to share only good and incomplete information with investors and analysts. The group alleged that whosoever disagrees with these orders are "sidelined and many of them leave". The group said in the large finance team, important employees leave due to pressure to make deals look good.
Edited by Manoj Sharma