Infosys’ appointed legal firm, Shardul Amarchand Mangaldas, reviewed over 2.1 lakh documents from electronic sources and imaged devices; over 8 terabytes of electronic data; conducted 128 interviews with 77 persons; identified 46 custodians for the collection of relevant documents and electronic data over three months and came to the conclusion that the allegations by a whistleblower group against its Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) were fabricated and false.
What the legal firm did not do or had access to was the voice recordings and e-mails which the whistleblower group had shared with the US law department as it feared that its identity would be compromised. There is a possibility that the US regulator, Securities and Exchange Commission (SEC) might have access to these ‘evidence’, though as the non-executive chairman of Infosys, Nandan Nilekani told a press conference on Friday that they were not telling him whether they had such evidence or not.
Nilekani, at a press conference which was telecasted live by a business news channel, pointed out that the company always knew that allegations were wrong but still went ahead and hired a law firm to carry out the investigation. Nilekani was aggressive in his defence of the management and heaped praises on the CEO and CFO for their dedication to the cause of the company. He pointed out that not only did they make themselves available whenever the probe panel wanted them to testify, but also took upon the task of closing the account books within nine days so that they didn’t miss the deadline of presenting the third quarterly results to the board on January 10, this year. “It is to the credit of the people of Infosys, leadership, finance department that they were able to carry out such a difficult task quite admirably,” he added.
Nilekani did not leave it at that. He went after every journalist present at the press conference whoever “dared” to ask questions. To one journalist, he insisted that he should use the words which he felt were correct to describe the whistleblower group’s allegations before proceeding with his question. He relented to listen to him only when the journalist repeated whatever Nilekani wanted him to say. To another journalist, he remarked rather sarcastically that he was relieved that he termed the whistleblower group’s “evidence” as allegations.
Another journalist wanted to know the reason for repeated complaints from whistleblowers and whether the company planned to take some corrective action. “This is Netflix Season three,” Nilekani said dismissing such complaints as nothing but trivial. “Yes, it is a distraction,” was what he thought of the allegations against the company indicating that he had already made up his mind even before the probe panel had come out with its report.
The journalists assembled at the press conference were so psyched out by the unexpected aggression from Nilekani that nobody dared to counter his rather abrasive and sometimes offensive statements by pointing out that a previous allegation of a whistleblower group had resulted in the exit of the previous CEO, Vishal Sikka, the chairman of the board and a few of its other members. Nilekani kept the floor open for further questions on the probe panel’s findings even though it was eating into the time for the announcement of the third-quarter results. But by then, as the live telecast showed, journalists had had enough of Nilekani’s aggressive posture.
Nilekani should have known and he probably does that a probe panel which is appointed by the board of a company which is the accused party, in this case, carries only that much of legitimacy. He could have advised the investors and the board to wait till the US SEC and the Indian regulator SEBI comes out with its findings before tabling the report of the investigating committee to the board.
He should have taken a leaf out of the case involving ICICI Bank’s former CEO & MD, Chanda Kochhar who was exonerated of all the charges against her after the law firm, Cyril Amarchand Mangaldas, which was hired to probe allegations against her found her not guilty. The board in a filing to the BSE later said that it had full confidence and reposes full faith in Kochhar, something similar to what the Infosys board and Nilekani have done. Six months later, the law firm withdrew its report after fresh allegations surfaced against Kochchar. The then chairman of the board, MK Sharma later said that the board’s decision to give her a clean chit was based on the report of the law firm.
Nilekani should have also kept his misgivings about the allegations to himself instead of airing them to the analysts in November where he declared that, “Infosys has strong processes; even God can’t change the numbers of this company. Our finance team is feeling insulted by these allegations…,” until the probe committees came out with their respective reports. Earlier, he issued a statement to the BSE claiming that the company had conducted its own probe and prima facie nobody was guilty of the alleged crime of boosting profits and revenues, as per the allegation made by the whistleblower group.
Such statements may not have influenced the law firm’s probe panel’s findings but Nilekani is no ordinary individual. His words carry weight not in this country alone but globally too which he has rightfully earned. Hence, being a little circumspect would have been the more prudent thing to do.
Nilekani was also quite dismissive about the whistleblower group itself claiming that it could have been the handiwork of outsiders. And as far he was concerned, the investigation was over and done with. As a chairman of the board of directors, making a spirited defence of the company’s management is par for the course but when one overdoes it, it can be damaging because the management might be lulled into believing that they could get away with anything as the chairman and the board will always be there to defend them.