Murthy reiterates need for clarity on payout to former CFO Bansal

Infosys founder cites 'governance deficit' again, demands full findings of an investigation into a whistleblower complaint on the matter

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 Image: Bobby Yip/ Reuters
Narayana Murthy
Infosys founder NR Narayana Murthy reiterated the need for clarity on the decision by the company’s then board of directors to make a Rs 17.38 crore severance payout to former CFO Rajiv Bansal in October 2016, according to the transcript of his statement to investors in a call he held on Tuesday.

The transcript was emailed to reporters by Investec, an investment management company that organised the call with Murthy. The founder of the Bengaluru IT company held this call to provide his views after a very public, year-long rift between him and the board led by the then Chairman R Seshasayee, which precipitated the departure of CEO Vishal Sikka three years after he was headhunted for the job by Murthy himself.

Blaming him for Sikka’s resignation, who quit on August 18, was deflecting from the need to address what Murthy once again called “governance deficit” by the Seshasayee-Sikka board in addressing the allegations made by a whistleblower about the payment to Bansal, Murthy said.

On August 18, the Seshasayee-Sikka board had squarely blamed Murthy for personal attacks and negativity as the reason for Sikka’s resignation. Murthy has demanded that the full findings of an investigation into allegations made by a whistleblower in complaints to the Securities and Exchange Board of India, in February, be made public.

The allegations include complaints about the overvaluation of Panaya Inc., an Israeli software company that Infosys acquired in 2015, and the implication that the payout to former CFO Rajiv Bansal, who left the company in December 2015, was “hush money,” as Murthy has termed it previously.

In his statement to investors during the call on Tuesday, Murthy also alleged that some members of the board repeatedly provided inconsistent responses to his queries about the reason for the payment. At one point, on July 15, 2016, he was also informed by Roopa Kudva, an independent director and chairperson of the board’s audit committee, that he would have to sign a non-disclosure agreement to learn the details of the reasons, Murthy alleged.

This happened in the presence of co-founders Nandan Nilekani and K Dinesh, Murthy added.

In a statement on ‘summary findings’ of the results of an investigation into the whistleblower complaints conducted by two independent firms, commissioned by Infosys, the company said the CEO had done nothing wrong in the Panaya acquisition, in June this year.

“However, this statement does not mention whether the investigation addressed the allegations of the whistleblower regarding the serious governance deficits of the board and the CEO in the matter of the severance agreement with the ex-CFO,” Murthy said in his statement on Tuesday.
 
“My hope was that the detailed report would contain a full rebuttal of the claims of the whistleblower,” he added.

Within days of Sikka’s resignation, the board named co-founder Nandan Nilekani as non-executive chairman, on August 24, and Sikka, Seshasayee and two other board members quit as directors as well. Nilekani, with interim CEO UB Pravin Rao, will aim to bring stability to the company by finding a permanent chief executive, he told investors and reporters in separate interactions on August 25.

Infosys shares were down 9.2 percent at Rs 926.75 at close of Mumbai trading on Tuesday, from Rs 1,021.05 on August 17, the day before Sikka announced he was leaving.

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