The retail investor fud is happening all around media, all of a sudden news about INFY everywhere. The incident happened on 20 september and it took so long to come out?
This is how media and punter groups work. They slowly leak the news out in media after building positions. Infosys is very weak after the result. The pre-open itself is down despite good results (according to analysts consensus). Generally, when there is good performance, the next day pre-open will be 3% higher and then sell off happens.
Letâs go a month back, on sep 21st. When the whole market is up by 5%, Infy is down by 5% (weird compared to TCS). So, news is already out on 20 sept. Only few people knew. Later, they pumped a bit till the results and then build the positions and released it in media.
Note: I am following INFY technically since a month, felt a bit weird.
How much will be the impact on Indian Exchanges as
US-listed shares of Infosys Ltd fell nearly 16% in premarket trading on Monday
It will be down with same percentageâŚ
Someone already knew this if you check Infy Options OI of 740 PE
Tomorrow will open gap down for sure. The issue was known to Infy board since Sep 20 through the whistleblower letter, so I had expected their first official reply to be bit more detailed. All it says is, they will investigate , go through the process. This will spook the FII for sure. If allegations are true there will be untold investor confidence impact, especially from FII side - not just in Infy but their distrust could spread to overall Indian market.
Disc :Not invested
According to the statement issued on behalf of Mr. Nandan Nilekani, Chairman, one Board member received two anonymous complaints on September 30, 2019 one dated September 20, 2019 titled âDisturbing unethical practicesâ and the second undated with the title, âWhistleblower Complaint.â These letters were placed before the Audit Committee on October 10, 2019 and before the non-executive members of the Board on October 11, 2019. Additionally, on October 16, 2019 the Company was made aware of a letter dated October 3, 2019 which was purportedly written to the Office of Whistleblower protection program, Washington D.C.
It is further informed that Post the Board Meeting of October 11, 2019 the Audit Committee began consultation with the independent internal auditors (Ernst &Young) on terms of reference for their prima facie investigation. The Audit Committee has also retained the law firm of Shardul Amarchand Mangaldas & Co. (October 21, 2019), to conduct an independent investigation.
Statutory auditors, Deloitte, India were also been completely updated on this matter post the Board meeting of October 11, 2019.
The question is why the stake-holders were not informed about all these development ?
This is corporate governance has plummeted to new low for the Company.
Mr. Narayana Murthy used to say when in doubt, disclose.
The present board has taken exactly opposite view : when in doubt, hide.
Shareholders have already taken a knock of 16% today.
I was discussing with my college friend yesterday after this news surfaced. Unethical practice is not a new thing for Infosys. It is there in very grassroot level. My friend was deprived from his variable money after putting paper. Company had their own explanation of not giving that part of money. He fought back but unable to continue due to location change and next company work pressure.
If they are doing this with a senior resource of their company then God knows what is the situation of freshers.
Disc : Not invested. Not supporting whistleblower allegations. Expressing my personal point of view of an incident happened to my close friend.
What happened between September 20, 2019, (when the first anonymous whistleblower complaint was received) and October 10, 2019 (when the audit committee of the board first heard about it formally)? Three weeks are a long time to wait before a complaint of such a serious nature is addressed by the board.
The fact is the allegations are serious. The allegations relates to purported irregularities in how revenue and costs are recognised. It also says that billions of dollars in deals have no margins at all. Treasury has also been asked to take undue risks. The manner in which Infosys has dealt with this issue is far from the standards expected of the company. Infosys must resist the temptation to hide behind half-truths. Instead, it must truly embrace the transparency that it says it holds dear and explain the manner in which the issue has been handled so far. It must fully assist in a time-bound and thorough investigation which examines all the evidence. It must also take credible action based on the outcome of the investigation. Anything less, and Infosys will be doing a disservice to itself.
Seems the management tried their best to hide / delay till the letter / information was with them but they had no option once it reached to the Office of Whistleblower protection program, Washington D.C.
"on October 16, 2019 the Company was made aware of a letter dated October 3, 2019 which was purportedly written to the Office of Whistleblower protection program, Washington D.C."
They had enough time to calm it down & retailers wouldnât have lost⌠the way they did today but certainly big guys and management plays with retailers money & they really donât care about retail shareholders.
Please note that these are anonymous letters/mails without any documentary proof attached. Board cannot boil the ocean based on any anonymous letter. It does not take much effort to do this kind of complaint. It can happen on a daily basis and board can not be expected to hire a law firm every time. I am sure they must be getting a lot of anonymous complaints. Board must have taken its time to deliberate upon this. They received it only on 30th September.
"one Board member received two anonymous complaints on September 30, 2019 one dated September 20, 2019 titled âDisturbing unethical practicesâ and the second undated with the title, âWhistleblower Complaint.â
Now it is interesting to see that short positions were built on 25th September itself. Only so called whistlebloweres could have done that as only they were sure of imminent fall and they did it just after posting those mails/letters. Looks like they were looking to stall Q results resulting in bigger chaos. It seems to be clear case of creating panic situation to benefit from fall. Now look at timing of leak to media. Few days before month end expiry. Else how do they make money. Board may have just investigated and not made this public. Hope SEBI is looking it.
What are charges? Some frivolous personal issues like travel. Second is large deals at low margins, now is that fraud. It may be new management strategy to play volume game and capture space being vacated by likes of Cognizant and CSC. None seems to be any kind of fraud.
There are many disgruntled employees who will term lot of actions as unethical. Having worked for this company in the past, I can vouch for the fact that they are still among the best as far as corporate governance is concerned.
Disc: Invested.
So called aggressive accounting is not reflected by cash flow. Some delays in receiveables which is common when you are operating in global slowdown. Also, this is pretty good picture compared what other tech vendors globally face.
Disclaimer: Invested. Biased personal opinion. Not a recommendation to buy.
The charges apparently do not appear of serious nature from Indian Standards however it reflects poorly in terms of global standards. I think the company will come clean out of it and will learn a lesson for the long run.
Even if all the alleged charges are true I believe the Corporate Governance standard of Infosys will still be one of the best among Indian companies.
BSE seeks explanation from Infosys on non-disclosure of whistleblower complaint
A class action lawsuit has been filed by US based Rosen Law Firm seeking damages on behalf of Infosys investors in a New York court on Wednesday. It has demanded a jury trial and accused Infosys of making false and misleading statements, besides failing to make appropriate disclosures, according to a statement by the firm.
Dividend and buybacks keep tricking in why would they bother.
One goes and another comes⌠Is it getting into YES type of situation, which doesnât want to stop âbeing in news for good / bad talksâ
Recent allegation are VERY PERSONAL as they talk about violation of the companyâs value system.
In my view, it shouldnât be taken seriously in current dynamic world where most of the IT tasks/ calls / discussion are performed remotely using fast paced internet world. It could be legally wrong as per policies but shouldnât impact business.
99% of all the allegations are frivolous and not even worth a discussion - but racial remark that Mr. Salil Parekh supposedly used and if proven right will take him out of Infosys and possibly from a top job in any respectable technology company.
AJ
This is as clear as it gets. These allegations are coming only because there is a lobby which does not want him as he is an outsider. The same story was repeated with Mr. Sikka with good success. The lobby wants to provoke NRN uncle so that another turmoil could be unleashed. One needs to think how would a CEO function when his own subordinates are ready to record his meetings and calls to use it against him. Most of the folks who reach to the top are aggressive who could indulge in abrasive behaviour at times. Its acceptability is debatable but one canât be surprised by the same. This is not a reflection on Mr. Parekhâs greatness but culture at Infy where folks canât tolerate an outsider boss and keep playing political games. Investors need to worry as this remains a big distraction for the senior management.