Tell Us When The Whistle Blows

Accusations of auditing malpractices rock Infosys’s boat

- Ajay Sukumaran

BAD news must take the elevator and good news can take the sta­irs—this Infosys corporate gov­ernance credo from its founding days played out dramatically this week as jittery investors reacting to a whistleblower accusation sent its share price into a tailspin, lopping off $7 billion in market value over a day. For Infosys, the anonymous allega­tions of unethical accounting practices have disrupted a relatively stable two­ year run since a board wrangle in 2017.

News reports on October 21 revealed that letters were sent to the Infosys board and the US Securities and Exchange Commission’s Office of the Whistle­ blower alleging unethical practices by the CEO in recent quarters. And that this critical information was hidden from the auditors and the board.

“The same measures have been taken up in the current quarter to boost short­ term revenue and profits,” the letter read. “In the last quarter, we were asked to not fully recognise expenses like visa costs to improve profits.” Revenue recognition in some large contracts, it alleged, did not meet accounting standards. The whistle­ blowers claimed to have voice recordings and emails, which apparently have been provided to the SEC, going by the letters leaked to the media.