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Infosys hires PwC to probe plaints

Infosys hired PwC to investigate two whistle-blower complaints alleging financial malfeasance against chief executive and finance chief. The company has already roped in law firm Shardul Amarchand Mangaldas (SAM) to look into the legal side of the...

, ET Bureau|
Updated: Nov 07, 2019, 11.43 AM IST
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Audit firm to look into contracts signed with clients and the way it recognised revenue.
MUMBAI: Infosys has hired PwC to investigate two whistle-blower complaints alleging financial malfeasance against chief executive Salil Parekh and finance chief Nilanjan Roy, three people with direct knowledge of the matter said.

The Bengaluru-based technology company has already roped in law firm Shardul Amarchand Mangaldas (SAM) to look into the legal side of the complaints and asked its internal auditor, EY, to probe its revenue recognition practices. Its board on Saturday decided to carry out an investigation independent of the other two as it wanted a “fresh set of eyes” to look into the allegations, said the people.

PwC’s investigation would cover the contracts that Infosys entered into with some of its clients and the way it recognised revenue, they said. It has been asked to submit the report within two months.

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“Initially there was a view that most people including investors and clients would see that the issue and allegations do not hold water. But looking at the impact that this has had (on stock price and reputation), many board members were of the view that a separate investigation should also be carried out,” said one of the people.

An Infosys spokesperson, responding to an email query, said, “We do not have any information or comment to share on the below (question) at this time.” PwC did not respond to ET’s query till press time Wednesday.

“The investigations would focus on the allegations, but the firm (PwC) is mandated to even go beyond the allegations and a broader time period, and the company’s deals would be investigated,” said another person in the know. “The firm has been asked to submit the report as early as possible,” he said.

“Process review of certain contracts with customers would be carried out … This is a separate line of investigation and we want that this forensic audit (by PwC) look into revenue recognition and actually investigate contracts,” said the third person.

Infosys last month said an unnamed whistle blower, apparently a group of employees, had accused top executives of unethical practices. The company said its audit committee had been asked to look into the complaints and take necessary actions.

The whistle-blower letter, written to the US Securities and Exchange Commission and the board of Infosys, alleged that fearing a negative impact on the share price, the CEO instigated some employees to bypass approvals in order to fetch some large deals.

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