Infy may have to pay Rs 12 crore to end CFO package row

Infosys may have to pay remaining Rs 12 crore of severance package to former chief financial officer Rajiv Bansal to settle the dispute even as the whistleblower in the case has opposed any such settlement.

The Bengaluru-based IT bellwether is in the midst of a controversy with an anonymous whistleblower disclosing inconsistencies in the amount paid as severance compensation to Bansal and irregularities in Infosys' acquisition of Israeli firm Panaya.

Last week it filed a consent application with the market regulator Securities and Exchange Board of India (Sebi) to settle the matter.

"There is no question on whether there was an (severance) agreement with Bansal (with Infosys). Nobody can dispute that. There is an umpire to whom both Infosys and Bansal are presenting their cases. This is not a court but equally important for a dispute settlement. It is going in favour of Bansal. This may mean that Infosys may have to pay the balance (of severance package of Rs 17.3 crore) to Bansal. In the light of this, Infosys has gone and filed for consent agreement with Sebi," said the source, who requested anonymity.

The source said the consent application was made to close the matter.

The ex-CFO, who quit in 2015, has reportedly been paid Rs 5 crore of Rs 17.3 crore, the balance amount is still due to him. Early this year, Bansal invoked the arbitration clause in his severance agreement to claim over Rs 12 crore still due to him. Infosys promoters, led by N R Narayana Murthy, have been calling the abnormal payout to him as "hush money". Persistent pressure from them on the company led to the resignations of the then chairman R Seshasayee and CEO Vishal Sikka.

The source also said that the company was rushing to close the matter before the new CEO Salil Parekh takes office, from January 1. According to him, Parekh has made it clear to Infosys that he did not want the baggage of the controversy and wanted to start off with a clean slate.

"The new CEO is becoming a Board member on January 1. I understand one of the conditions that he has put is all these things should be resolved and not brought to the Board. He wants a clean slate to start with," he said.

However, it looks like it may not be that easy for Infosys to banish this thorny issue in a hurry. Its consent plea with the market regulator has been opposed by the whistleblower, who has asked the Sebi to reject it.

"While I understand it is a norm for large corporates to do backdoor settlements and protect their turf in case of genuine excesses, in Infosys case the regulator should deny that luxury and make the management accountable in the larger interest," wrote the whistleblower in his letter to the regulator.

The whistle-blower's email, a copy of which is with DNA Money, says if the case was settled through the back door, it would discourage other whistleblowers from exposing wrongdoings in any company in future; "this is the first time an internal whistle blower had took pain to unravel a fictitious payment to an ex-CFO and a suspicious acquisition with personal conflicts attributed to senior management. If this case is settled through the back door then no whistle blower in future will take the pain to expose such things".

He urged the Sebi to "prosecute" the management to set an example; "the impunity with which the Board both past and present dismissed the allegations when they knew they were wrong is unprecedented and just for this reason Sebi should dismiss this settlement overture and prosecute the management and board to set an example".

The same letter raised several pertinent questions on lapses in corporate governance at Infosys.

"The key question is why such an unprecedented payout was agreed and under what circumstances such payment was agreed? Was it a hush money like some had suggested? These are real questions which require answers. Why the company signed a non disparaging contract with earlier management and protecting them. Why the ongoing Sebi investigation was not disclosed to the investors," asks whistleblower.

Drawing a parallel with NSE, he has asked Sebi to give Infosys case the same treatment.

"There too (NSE case) the board and the management dismissed all allegations levelled by a whistleblower, ordered an investigation under their supervision and gave clean chit to themselves. The current management filed for consent, but Sebi is not accepting that and asking for special investigation. Why Infosys case should be different from the NSE case? Why not Sebi order a fully independent investigation including a forensic investigation and make people accountable?"

V Balakrishnan, former CFO of Infosys, told DNA Money that Board members like Ravi Venkatesan and Roopa Kudva, who were in "responsible position" when the lapses occurred, should step down and the current chairman Nandan Nilekani should "reconstitute the Board by getting in "good people".

"Earlier board (under Seshasayee) said there was no wrongdoing and now the filing of a consent agreement (with Sebi) shows there is some wrongdoing. So, people who were in responsible position like the auditing committee and the co chairman on the board, they should step down and probably Nandan (Nilekani) should get good people on the board and reconstitute it," he said.

Kris Lakshmikanth, founder and chairman of The Head Hunter Pvt Ltd, told DNA Money that he believes the whistle-blowers did not have any locus standi in the case and whole matter was headed for a closure.

"The whistleblower has no locus standi in this. If he think it was hush money there is no way to prove it. This story will be over. Now that consent plea has been filed with the Sebi, this anonymous letter has no meaning," he said.

LINGERING ON?

• Infosys is in the midst of a controversy with an anonymous whistleblower alleging inconsistencies in the amount paid as severance compensation to Bansal and irregularities in acquisition of Israeli firm Panaya.
   
• Last week it filed a consent application with the market regulator Securities and Exchange Board of India (Sebi) to settle the matter over the CFO's severance package