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Infosys shares dive 15% as regulators investigate false accounting claims
Whistleblowers claim to have email and audio evidence
Infosys shares dropped almost 15 per cent on the Bombay Stock Exchange yesterday on news that regulators are investigating serious allegations of false accounting at the organisation.
Whistleblowers, who claim they are employees at the company, have written to both the board of directors and regulators in Washington alleging they have audio recordings and emails evidencing senior executives oversaw dubious accounting practices so as to boost the company's apparent short-term results.
Two letters were sent to a board member at the end of September, one titled "Disturbing unethical practices" and one "Whistleblower Complaint".
These were then forwarded to the audit committee on 10 October and handed to the non-executive board members the next day.
Infosys said its audit committee will investigate the complaints in line with its whistleblower policies.
Company co-founder and current chairman Nandan Nilekani said in a statement that a law firm had also been hired to look into the allegations.
He said: "These complaints are being dealt with in an objective manner. The undated whistleblower complaint largely deals with allegations relating to the CEO's international travel to the US and Mumbai."
The statement revealed the company is also aware of a letter sent to the Office of Whistleblower protection in Washington claiming to have emails and voice recordings in support of the allegations.
Infosys has begun talks with Ernst & Young to decide on terms of reference for their prima facie investigation and the Audit Committee has also retained the law firm of Shardul Amarchand Magnolias & Co to investigate the claims.
It also informed its auditors Deloitte, India of the accusations.
This is not Infosys's first trip to the rodeo. In 2017 it lost its CEO following allegations of dubious corporate governance and over generous pay packages.
The replacement, Salil Parekh, is still CEO and managing director.
For the third quarter ended 30 September Infosys claimed revenue growth of 9.9 per cent to $3.21bn.
The full Infosys statement is available here.