Whistleblower's heat on Infosys board, questions U-turn on Panaya

Writes to Indian, US regulators seeking accountability for 'dud acquisitions'

A whistleblower on Saturday wrote to regulators in the US and India seeking accountability of the Infosys board that in 2015 approved the decision to buy Panaya and Skava, two subsidiaries, which the information technology giant put on the block on Friday. These acquisitions have been described as “value-less”.

The Bengaluru-headquartered company on Friday said it was looking for potential buyers for Panaya and Skava. A strategic review conducted by the current management decided to focus on select segments that are aligned with the company’s new four-pillar strategy. 

The company also wrote down $90 million (Rs 5.9 billion) in the investment value of Panaya, the Israeli automation technology company bought for $200 million (Rs 12.44 billion) in February 2015.

In the mail, the whistleblower said the Panaya acquisition was once touted by the erstwhile chief executive officer (CEO) Vishal Sikka as one of his greatest strategic achievements and was supported by the earlier board. 

“But the current board is clearly saying that both Skava and Panaya were dud acquisitions and writing down almost 50 per cent of the investments. We need to believe the current board as the earlier board was an accomplice in that crime,” said the mail the whistleblower claimed to have sent to the US Securities and Exchange Commission and the Securities and Exchange Board of India. Business Standard has reviewed the mail.

The allegations of wrongdoing in the Panaya deal surfaced after the company announced a hefty severance package to then chief financial officer Rajiv Bansal, leading to a complaint from a whistleblower that triggered a bitter boardroom battle.

This also led to former chairman N R Narayana Murthy stepping in and demanding a thorough probe into the incident. Sikka and then chairman R Seshasayee also exited the company. Co-founder Nandan Nilekani became the non-executive chairman to bail the company out of the crisis.

“My question to you, the regulator, is: Where is the board’s accountability in this whole transaction? The members of the earlier board — Ravi Venkatesan, Kiran Mazumdar-Shaw, Punita Kumar-Sinha and Roopa Kudva — who participated in approving and defending these acquisition are still in the current board,” the whistleblower said in the mail. 

Infosys could not be reached for their comments on the whistleblower’s allegations. However, in reply to a question on Friday on what made Infosys classify Panaya and Skava as non-core assets, CEO Salil Parekh said there has been a change in the focus of the company.

“There’s been a change in the way we have looked at what the business is doing in the market environment. The business itself has changed. Based on that, we decide to focus on the four pillars that we have outlined: Specifically on the digital services,” he added. 

Parekh said the work that Infosys was doing with Panaya products for its clients would continue. Infosys had said that it is expecting the completition of the sale of both Panaya and Skava by March 2019. 

Experts were of the opinion that selling a company could hardly be a case of a complaint in this matter.

“There are enough number of examples when companies have been bought and sold, so I don’t see any surprise element in this nor does the whistleblower’s allegations matter,” said Shriram Subramanian, founder and managing director of proxy advisory and corporate governance firm, InGovern.

“Now there is a new CEO (at Infosys) and accordingly the company’s strategy may have changed. It’s reasonable to expect that there will be certain changes based on the new strategy,” he added.