Shareholder advisory firm SES has alleged violation of corporate governance practices by the Infosys board in the appointment of Nandan Nilekani as Chairman.

“Decisions at the board level are taken after due deliberations in the board meetings and this has been given a go-by,” said SES in a report. Further, it said that the decision to appoint Nilekani was taken outside the board meeting, even before the Directors met.

“It was decided to make him the Chairman, otherwise how is it possible that Nilekani was present in the board meeting as soon as a resolution was passed to appoint him,” said JN Gupta, MD, SES. Nilekani’s appointment was officially announced late on August 24 and this was followed by meetings with key Infosys executives.

Gupta, a former Director of SEBI, also questioned how all the four outgoing members of the Infosys board would agree to Nilekani’s appointment and resign thereafter. He was referring to resignations of R Seshasayee, Jeff Lehman and John Etchemendy from the Board. The fourth, Ravi Venkatesan who was the co-chairman along with Seshasayee, demitted his position but continues on the board.

SES further alleged that all resignations, appointments and re-designations were part of a “compromise” formula, which was worked out through backdoor channels, outside the boardroom, and Gupta.It is clear that the board just endorsed a decision already taken and merely acted as a rubber stamp and doesn’t fit in SES’s standards of good governance, said Gupta.

Advisory firms globally believe that boards have a collective responsibility, but in this case SES believes that is not so. “It is a case of selective responsibility for some and perfect immunity to others,” the note said. SES is of the opinion that if outgoing directors were bad then remaining directors are either guilty of acts of commission or omission.

“Does Infosys belong to this category where all this is normal? Certainly not,” said Gupta, adding that no question has been raised by co-founder N R Narayana Murthy.

Some other proxy advisory firms like InGovern have a different point of view. “Look, one has to see the practical aspects and it is tough to surmise the way deliberations panned out,” according to Shriram Subramanian, founder, InGovern.

Contrarian view Kris Lakshmikanth, founder of HeadHunters India, said that in such cases, decisions are taken ‘offline’ and then consent is sought from shareholders, but he added that it does violate the ‘spirit’ of governance.

All these developments come in the backdrop of a public spat between Infosys co-founders, who own 12.4 per cent of the company, and the management, which led Vishal Sikka resigning as CEO after charges of corporate governance lapses were made against him in the Panaya acquisition; the tip off to SEBI came from a whistleblower.

Just before Sikka’s resignation, Murthy had asked the details of the Panaya report to be made public. Subsequently, Nilekani has said that he will get a full briefing on these investigations and the course of action will be decided. Infosys is in a silent period and will announce its results later this month.