<b>Shyamal Majumdar:</b> Rajiv Bansal's strange silence

The former CFO of Infosys has no contractual obligation to keep quiet

It’s perhaps better late than never. Infosys gave a detailed statement on Monday to refute the allegations made by a whistle-blower that the Panaya acquisition was overvalued and that it was possible that some Infosys executives had benefitted from the deal. One can only hope that the inquiry ordered by Infosys into the allegations about the Panaya deal will clear the air over it.

Many say critics are making a mountain out of a molehill by raising the issue of former chief financial officer Rajiv Bansal’s severance pay. The argument goes like this: Indians are anyway much behind the rest of the world, when it comes to severance package doled out to corporate executives, with only three to five per cent of Indians getting severance pay as a safeguard clause in their contracts, compared to 60 to 70 per cent in the US.

But that argument is barking up the wrong tree. The key question is why a company known for its excellent disclosure standards didn’t keep the minutes of the board meeting that decided on Bansal’s severance pay. In the past, Infosys has even disclosed that the company’s contract with Sikka bars him from poaching people for at least a year when he quits, and the contract with Chief Operating Officer U B Pravin Rao says he cannot work with five information technology firms for at least six months after he leaves. But in Bansal’s case, all that the company is willing to say is that the severance pay reflects the “enhanced non-compete clause” the company signed with him. But there is no explanation of what it means by “enhanced non-compete”. 

What is stranger is that the person at the centre of the storm over the past several months is maintaining a studied silence. There are at least two reasons why Bansal should speak up.

The first is that the flood of allegations against Infosys has also put Bansal’s own professional reputation at stake. It has been alleged by no less than N R Narayana Murthy that the severance payment could have been “hush money”. Though Murthy didn’t name anybody, the hint was clear — that Infosys agreed to give Bansal a generous severance payment to buy his silence. That’s a charge few professional executives would like to remain quiet about.  

The fact is that there is no contractual obligation prompting Bansal to remain silent. The separation agreement that Infosys signed with him in October 2015, explicitly enabled him to report to the regulatory authorities in future any matter of impropriety that he became aware of and which occurred during his tenure. 

The whistle-blower has said that Bansal walked out of a board meeting that was to approve the proposal to buy Panaya. The ostensible reason cited was Bansal thought Infosys was paying too much money and was also upset that as CFO, he had not been kept in the loop during the due diligence process.  Bansal, it has been mentioned, later dropped his objection to the deal for reasons unexplained. 

On the face of it, Bansal should have no reason to keep quiet, as two probes were conducted by law firm Cyril Amarchand Mangaldas in October 2015 and the Audit Committee of the company in August 2016. Both found no basis for the allegations that the severance payment was intended to silence him. KPMG, the statutory auditor of the company, had conducted shadow proceedings on both investigations and expressed satisfaction with the investigations and conclusions of the reports.

The second reason why Bansal should speak up is that according to the original separation agreement, he was to be paid in two parts — one was Rs 6.53 crore that was due to him in any case as an employee, partly as a key management personnel. The severance pay was Rs 17.38 crore, which is 24 months’ pay.

But after the allegations surfaced for the first time, Infosys went back on its commitment and has paid only Rs 5.2 crore so far while keeping the balance payments under suspension. The reason for Bansal quietly accepting this apparent violation of contract terms by Infosys is not known. 

His silence on the issue becomes deafening after Infosys Chairman R Seshasayee’s comments at a press conference that the Infosys board has ensured there would be “no ‘Rajiv Bansal’ situations” here on.