Infosys board clears Panay probe, but keeps it under wraps
25 Oct 2017
The board of Infosys Ltd headed by acting chairman Nandan Nilekani has given a clean chit to the controversial Panay acquisition, saying there was no merit in the allegations of wrongdoing.
Infosys said chairman Nandan Nilekani has conducted a review of all the external investigations into certain anonymous complaints the company had previously received. The review covered a range of matters, including the acquisition of Panay, which was completed by the company in February 2015 and the severance payments to the former CFO, it said.
"After careful consideration led by our chairman, the board reaffirms the previous findings of external investigations that there is no merit to the allegations of wrongdoing," Infosys said in a statement announcing the company's results for fiscal second quarter.
This was Infosys' first earnings announcement after Nilekani took over the reins of the Bangalore-based company, following protracted acrimony between the founders and the management that eventually resulted in the sudden resignation of the then CEO Visual Sitka and a board real.
Giving a detailed outline of the review undertaken on Panay issue, Nilekani said: "In light of my review of these matters, I am fully persuaded, as is the entire Board, that the conclusions of the independent investigations are correct."
Infosys founder NR Mahayana Murthy had demanded that the full report by Gibson, Dunn and Crutches on whistleblower allegations pertaining to the $200- million Panay deal, be made public.
But Infosys on Tuesday said that after a "careful re-consideration" it has concluded that putting out more details of the probe would "inhibit the company's ability to conduct effective investigations into any matter in the future".
The company also asserted that its review had confirmed that "appropriate" and "timely disclosures" were indeed made on severance payments to the former CFO.
Acknowledging Murthy's role in building Infosys as also in corporate governance matters, Nilekani said the Endeavour, going forward, will be to build a "trusting relationship" with the founder.
"The board notes that the questions and scrutiny in relation to these matters were fuelled in part by the strong feelings that various stakeholders have for the company and its success. Questions were raised by stakeholders who have a deeply held passion for Infosys," the company statement said.
However, the board feels it is time for the company to put these issues to rest and focus on strategy, operations and growth.
''I believe that all stakeholders acted out of a strong passion for Infosys, wanting what they believed to be the best for the company and to see it succeed. In light of my review of these matters, I am fully persuaded, as is the entire board, that the conclusions of the independent investigations are correct. This board and I are committed to the highest standards of professionalism and will deal promptly and decisively with any governance issues should they ever come up in the future,'' Nilekani, chairman of the board, said.
However, the company board felt the severance payments to the company's former CFO could have been better handled, asserting that the company has identified opportunities for improvements in processes and practices, which have been implemented.
While the disclosures in this regard were timely, based on the feedback received, the company has since December 2016 adopted a practice of disclosing the severance payment to key managerial personnel (KMP) at the time of their departure, making the disclosures sooner than required. Additionally, the company has now globally benchmarked its severance pay and revised its senior management employment contracts, it added.
Infosys said the company had placed no limitations or restrictions on the investigating team from accessing information, and the company and the relevant directors and employees cooperated fully.
Among other things, the review reaffirmed the conclusion of the independent investigation that there was no merit to the allegations of wrongdoing with respect to the acquisition of Panay. The review also confirmed that the company made appropriate and timely disclosures relating to severance payments to the former CFO at the end of the quarter of his resignation, and subsequently in the company's 20-F and annual report.
The company published the summary findings of these investigations, given the attention these matters had received.
''After careful re-consideration, the company has concluded that publishing additional details of the investigation would inhibit the company's ability to conduct effective investigations into any matter in the future. Confidentiality is critical to ensuring the candor and cooperation of whistleblowers and other participants in any investigative process. The precedent of releasing the full investigation reports could impair the cooperation of participants should the need for an investigation arise in the future, '' it said.
''As the company moves forward to a more stable environment I am grateful to all the wellwishers of the company, including Narayana Murthy, for their deeply held passion for Infosys. The board will continue to represent the interest of all the shareholders. I would also like to acknowledge the leadership role Mr Narayana Murthy has played in building this iconic institution and in corporate governance matters. Going forward, it is our endeavour to build a trusting relationship with Murthy,'' Nilekani added.
The board noted that the questions and scrutiny in relation to these matters were fuelled in part by the strong feelings that various stakeholders have for the company and its success. Questions were raised by stakeholders who have a deeply held passion for Infosys. The board responded with equal passion and good faith.
The board said it firmly believed that it was time to put these issues to rest and seek the support of all stakeholders to look towards the future, and to collectively focus on strategy, operations, and growth.