India’s Infosys says internal investigation found no evidence of wrongdoing

By Promit Mukherjee

MUMBAI (Reuters) – An internal investigation by India’s Infosys <INFY.NS> into alleged improprieties related to two acquisitions by the IT services company found no evidence of wrongdoing, it said on Friday.

The findings, released in a statement a day before the company’s annual shareholder meeting, may quell some of the investor disquiet that has buffeted Infosys in recent months.

Infosys commissioned law firm Gibson Dunn and consultancy Control Risks to look into allegations that a whistleblower made against the company in February.

Those accusations included improprieties in the acquisitions of Panaya, a New Jersey-based automation technology provider, and Silicon Valley start-up Skava, as well as inappropriate compensation paid to Infosys Chief Executive Vishal Sikka.

The whistleblower also accused Sikka of requesting that improper deals be made with customers, while saying that the company’s mergers and acquisitions team acted without proper approvals.

A letter from Gibson Dunn to the Infosys audit committee — published along with the company statement — said that the investigation found “no evidence whatsoever” of wrongdoing by Infosys, its directors or its employees.

Besides the whistleblower allegations, Infosys has also been rocked by accusations by some of its founders of lapses in corporate governance.

In early February TV channels reported that the company’s founder promoters, led by its first chairman N.R. Narayana Murthy, wrote to the board to express concerns about executive pay rises and severance deals given to two former executives.

Murthy didn’t answer a call seeking comment on the Gibson Dunn report that also said it “found no evidence that the CEO received excessive variable compensation or incurred unreasonable expenses”.

The internal inquiry also reviewed the results of an earlier investigation by Indian law firm Cyril Amarchand Mangaldas (CAM) on the departure of its CFO and on the veracity of its findings.

“We also concluded that CAM’s two previous investigations were thorough and that their findings and conclusions were reasonable and credible based on the evidence,” the Gibson Dunn letter said.

Shares in Infosys have also come under pressure from political rhetoric in the United States about the outsourcing of U.S. jobs and a proposed tightening of visa regulations in a country on which the company and its rivals rely heavily.

In a separate statement on Friday, New York Attorney General Eric Schneiderman said that Infosys had paid a $1 million settlement for failing to adequately compensate hundreds of workers, failing to pay applicable taxes and breaking U.S visa rules.

The settlement resolved whistleblower claims that Infosys, in the course of providing services, routinely brought foreign IT personnel into New York to perform work in violation of the terms of their visas.

Since the beginning of 2017, shares in Infosys have fallen by 6.7 percent while the Nifty IT Index has dropped 2.2 percent.

(Editing by Susan Thomas, Euan Rocha and David Goodman)

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