Infosys whistleblower case: SEBI may call for forensic audit on allegations of financial irregularities in IT major

The SEBI is likely to call for a forensic audit of the books of Infosys as it continues to probe whistleblower allegations of alleged financial irregularities at the company, according to sources. Following the whistleblower complaints that emerged last year, the regulator had initiated a probe into the matter, a PTI report said. The sources said “SEBI is likely to call for a forensic audit of Infosys’’ books to have a thorough understanding about the allegations. Former Securities and Exchange Board of India (SEBI) executive director JN Gupta told CNBC-TV18: “If SEBI is going to look into it and say that they want to have a forensic audit then they must have a definite reason for doing that because it is not a case that SEBI  would be ordering forensic audit without any solid case.” “So, whatever report that has been submitted to SEBI or whatever information is available to SEBI, probably they feel that the recommendation of a clean chit that has been given may not be right and so they would have done it. However, we are not sure whether Sebi has really done it or not.” [caption id=“attachment_7547121” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] It is very unfortunate what is happening with Infosys because the company was considered to be the benchmark of governance practices about three years ago. And, in a short period of two-three years if it is facing two or three inquiries and complaints like this, it is really unfortunate, Gupta said. He added it was thought that with Nadan Nilekani coming to the helm of affairs probably all these things would be over, but it seems that it is not over. “Either there is some tough person or somebody who is really behind Infosys and wants to destroy its reputation or it is a real situation where Infosys is really to be blamed, that I would not be able to say but then it raises fingers on people involved, on the whistleblower and everybody because one does not know the truth.” “So, we should have a provision in the law that if a whistleblower has been proved to be wrong, there should be some sort of a liability because just by some complaint you are causing a lot of havoc in the stock market and investors are losing money.” In November, SEBI Chairman Ajay Tyagi said a probe was on into the Infosys matter. At that time, he had also said one needs to ask either Nandan Nilekani or God on the IT major chairman’s assertion about even God can’t change the company’’s numbers. The National Financial Reporting Authority (NFRA), which comes under the corporate affairs ministry, is also looking into the allegations. In October, Infosys had informed the stock exchanges of having received anonymous whistleblowers’ complaints alleging certain unethical practices by the top management. Infosys Chairman Nandan Nilekani had said the whistleblower complaint dated 20 September, as well as an undated complaint had been received by one of the board members on 30 September. In the letter, dated 20 September, and signed by ‘Ethical Employees’, it was alleged that CEO Salil Parikh as well as Chief Financial Officer (CFO) Nilanjan Roy engaged in forced revenue recognition from large contracts not adhering to accounting standards. The complaints were placed before the audit committee on 10 October, and to the company’s non-executive board members on 11 October, also the day when Infosys announced its second-quarter results. US market regulator SEC has also initiated a probe on the matter, while Rosen Law Firm had said it was preparing a class-action suit to recover losses suffered by Infosys investors in the US. Back home, SEBI had sought additional information from the company, while the National Financial Reporting Authority (NFRA) - part of the corporate affairs ministry - is also looking into alleged accounting lapses at the firm. --With inputs from agencies