BENGALURU: A few unnamed employees, calling themselves ethical employees, have put software giant Infosys in the dock over its unethical accounting practices.
In a letter to the Infosys board and the US Securities Exchange Commission (SEC), they have accused Infosys chief executive officer (CEO) Salil Parekh and chief financial officer (CFO) Nilanjan Roy of indulging in unethical practices, according to media reports.
The two-page letter said that Parekh forced finance team to to make wrong assumptions to show the margins, according to a report in The Hindu Business Line. The group claimed that they have voice recordings and emails of the CEO and the CFO in their possession to prove the allegations against Parekh, said a report in Firstpost.
The employees also alleged that Parekh bypassed reviews and approvals to get bigger deals, said the report. The letter alleged that several billion-dollar deals in the past few quarters had no margin and asked the IT major to examine the deal proposals, margins, undisclosed upfront commitments made and revenue recognition with the help of auditors, the Firstpost report said.
The letter added that the complainants were asked to not fully recognise visa costs in the quarter and were pressured to not immediately recognise $50 million in reversals in a contract, according to a report in The Economic Times.
"Critical information is hidden from the auditors and board. In large contracts like Verizon, Intel and JVs (Joint Ventures) in Japan, ABN Amro acquisition, revenue recognition matters are forced which is not as per the accounting standards," the letter alleged.
The employees said they have been instructed not to share large deal information with auditors. They said they are confident of sharing the alleged emails and voice recordings with investigators when demanded.
The employees also alleged that in the quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognise reversals of $50 million of upfront payment in FDR contract, as it will slash profits for the quarter and negatively affect the company's stock price.
The letter was sent to Infosys board of directors on September 20. When there was no response from the board to their letter, an unnamed whistleblower on behalf of the employees on October 3 wrote to the US-based office of the Whistleblower Protection Programme.
In response, Infosys in a statement on Monday said the complaint has been placed before the audit committee as per the company's practices. "The complaint will be dealt with in accordance with the company's whistleblowers policy," Infosys said in a statement to IANS.
With inputs from agencies