Infosys: Settling the Unsettled

Moneylife Digital Team 27 December 2017

Economy & Nation

Infosys, once the torch-bearer of good governance, wants to bury its problems with a settlement and not a disclosure, even after Nandan Nilekani, an original founder, returned to helm the rocky enterprise. Four things have come to light after former CEO Vishal Sikka was virtually pushed into resigning. First, the claim that there was no wrongdoing under Mr Sikka in the acquisition of the Panaya company has been reiterated by Mr Nilekani. Second, it appears that Mr Sikka has signed a gag agreement (called non-disparagement agreement) when he exited, which probably explains his silence; but such agreements are usually tied to a monetary compensation and we don’t know if that is true in this case.

Third, Infosys has applied to the market regulator for a settlement, while admitting to no wrongdoing; investors are clueless about what is being settled because this paragon of good corporate ethics isn’t telling. Yet, a media report suggests that the settlement offered could be as high as Rs12 crore. Fourth, the mystery of the big exit compensation of Rs17.38 crore for former CFO Rajiv Bansal, once described as ‘hush money’ by none other than NR Narayana Murthy, remains. Will the settlement be in addition to the contracted payment to Mr Bansal? That issue is under arbitration after Infosys reneged on a 2015 agreement, after paying Mr Bansal only Rs5 crore.

But Mr Narayana Murthy is not raking up the issue any more and former CFOs TV Mohandas Pai and V Balakrishnan appear to welcome the settlement, even though the whistleblower is furious at the ‘backdoor’ deal to settle. However,

Mr Pai wants the board to apologise to Mr Murthy for writing to the bourses and blaming him for persistently questioning the company. Meanwhile, Mr Balakrishnan wants two directors —Roopa Kudva (former managing director of CRISIL) and Ravi Venkatesan (former head of Microsoft in India) to resign. It is curious why they have continued to hang on to their chairs, although their credibility as independent directors is in shreds.

Meanwhile Ms Kiran Mazumdar-Shaw, another board member, wants everybody to close the issue. In a Twitter squabble with Mr Pai over the issue of apologising to Mr Murthy, she asserted that former company chairman R Seshasayee had already admitted procedural lapses in the matter of the severance pay and apologised for it. What she forgets is that the issue remains in dispute and hasn’t gone away.

The whistleblower is correct in his assertion that if SEBI (Securities and Exchange Board of India) hushes up the matter, it will discourage other whistleblowers from coming forward with complaints. Remember, SEBI, today, is the most empowered capital market regulator in the world with vast powers; but it does not support, protect or compensate whistleblowers, unlike the US Securities Exchange Commission. This does not bode well for a healthy capital market. Interestingly, Mr Pai, who is extremely vocal about Infosys and other issues on social media, has been brought back to head SEBI’s primary market advisory committee.