Infosys Says Probe Found No Proof To Back Whistleblower’s Allegations
Infosys concludes investigation into whistleblower allegations as auditors find no evidence.
Infosys Ltd. said an independent probe has found no proof to support a whistleblower’s allegations regarding kickbacks and conflict of interest in two acquisitions by India’s second largest software services provider.
Two independent auditors – international law firm Gibson Dunn & Crutcher, LLP and risk consultancy specialist Control Risks – looked into the two anonymous complaints related to the company’s buyouts of Panaya Inc. and Skava Systems Private Ltd. in 2015. They failed to find any credible evidence supporting the allegations, according to a memorandum issued by Gibson Dunn.
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.Gibson Dunn Memorandum
The auditors said they found nothing to suggest:
- Inappropriate contracting.
- The mergers and acquisitions team failed to obtain appropriate approvals.
- CEO Vishal Sikka received excessive variable compensation or incurred unreasonable expenses for security, travel and the Paolo Alto office.
The Securities Exchange Board of India had in February forwarded the two anonymous complaints alleging irregularities in Infosys' acquisition of Israeli firm Panaya. The whistleblower had alleged that the $200 million paid by Infosys was 25 percent more than what the firm was valued before the acquisition in a Series E funding round. The complaints also raised concerns over Infosys' acquisition of Skava Sytems.
Infosys, in February, had denied all allegations saying that they were “misleading and slanderous”. Chief Executive Officer Vishal Sikka, in a letter to employees, had said that the “fabrications” were designed to tarnish Infosys’ reputation.
The clean chit by Gibson and Dunn comes ahead of its annual general meeting on June 24.
Infosys is already battling a number of issues and had recently said that it expects its profitability to be impacted by the Donald Trump administration's H-1B visa curbs, higher offshore taxes, an increase in minimum wages, and tightening of regulations in the European Union. It also saw exit of top executives and faced criticism from founders. The software services outsourcer is also facing allegations of discrimination against non-Asians by a former employee Erin Greene.
Shares of Infosys closed 0.32 percent higher, in contrast to the country's benchmark BSE Sensex which fell 0.5 percent during the day's trade.