An anonymous group calling itself ‘ethical employees’ has complained against the management of Infosys Ltd against taking ‘unethical’ steps to increase short-term revenue and profits to the board of Infosys and Exchange Commission (SEC) and the US Securities, stating that the complainants have emails and voice recordings as evidence for their claims, according to reports by ET.
Infosys said in a statement that the whistleblower complaint has been placed before the Audit Committee as per the firm’s practice and would be dealt as per the firm’s whistleblower policy.
The ‘ethical’ group alleged that CEO Salil Parekh, according to the letters, was bypassing reviews and approvals for large deals. The letter states that Parekh directed them to make wrong assumptions to show margins, and even the CFO was compliant and prevented the group from showing in board presentations of large deal issues. Many billion-dollar deals of the last few quarters have zero margins.
In the letter, the complainants asked the auditors to cross-check the deal proposals, margins, undisclosed upfront commitments made, and revenue recognition. Furthermore, the complainants were asked not fully to recognize visa costs in the quarter and were even pressured to not immediately recognize the $50 million in reversals in a contract.
This Infosys news might be one of the reasons why the Infosys share price has dropped by 0.21%. The current share price of Infosys stands at 768 points on NSE.
The letters state that in large contracts like Verizon, JVs in Japan, Intel, ABN AMRO acquisition, revenue recognition matters were forced, which were not as per the accounting standards.
According to the letter, CEO Parekh and CFO Nilanjan Roy were pressuring the finance team to show more profits in their treasury management.