Infosys, Murthy’s image take a beating: industry watchers

With Infosys Non-Executive Chairman Nandan Nilekani stating that there has been no corporate governance lapses on the part of the company, industry watchers believe the IT major’s image as well as that of co-founder NR Narayana Murthy have taken a beating.

JN Gupta of proxy advisory firm Stakeholder Empowerment Services and a former SEBI Executive Director, told BusinessLine that this has turned up as a case of smoke without fire. “It is a perfect case of an individual leveraging his/her reputation to achieve what he/she is not entitled to. Gupta was referring to the spate of incidents which played a crucial role in the then CEO Vishal Sikka, along with other board members including, Co-Chairman R Seshasayee, leaving the company.

Nilekani, who came in as Executive Vice-Chairman in August, said at the time that he will look into every aspect of corporate governance lapses himself. However, in a press conference on Tuesday said the investigating firms, which was spearheaded by Gibson Dunn and Control Risks, found that there was no evidence whatsoever to support any of the allegations regarding wrongdoing by the company or its directors and employees, and that the allegations were rebutted by substantial and credible evidence.

Prabal Basu Roy, a Sloan Fellow from the London Business School and a chartered accountant, said the new development clearly indicates that the matter has been put to bed. He said it shows that Murthy was totally unjustified in making the allegations.

Roy, who manages a PE fund and has formerly been a director and group CFO in various companies, said anyone in a position of responsibility will not make the probe report public. “I have said this earlier that this episode, whichever way it goes, has damaged Murthy’s credibility.”

Shriram Subramanian, founder and MD, InGovern Research Services, a corporate governance research firm, said there was no need to change the board as the results have turned out to be the same. While ruling out a split among the co-founders because of Nilekani stating that no wrongdoing was committed by the company, Subramanian said Murthy’s image has taken a beating.

Interestingly, issues about Panaya acquisition were raised by two anonymous whistleblowers who complained to the SEC about kickbacks that some employees had received as a part of the deal, amongst other lapses. When the co-founders led by Murthy had asked for the report to be made public, Sikka and other board members refused to do so. The sustained drumbeat eventually resulted in the company losing in excess of ₹30,000 crore in market capitalisation.

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