Infosys gives clean chit to Panaya acquisition, Murthy disappointed

NR Narayana Murthy said he stood by “every question on poor governance raised in my speech to Infosys investors.

Infosys Ltd co-founder and chairman Nandan Nilekani on Tuesday said the company had found no evidence of wrongdoing in the contentious $200 million acquisition of Israeli automation technology firm Panaya Ltd in 2015.

Nilekani reiterated Infosys’ previous stance on the investigation, effectively handing a clean chit to former CEO Vishal Sikka and the previous board, drawing an immediate riposte from co-founder NR Narayana Murthy. Nilekani’s remarks raised further questions on the recent overhaul of the company’s board and top management.

Nilekani declined a direct answer when asked whether the company’s latest stance on Panaya effectively backed the stand of Sikka, who quit in August, and the previous board, although most experts and analysts tracking Infosys interpreted the latest statement from Infosys as a vindication of sorts for Sikka.

“Publishing additional details of the (Panaya) investigation would inhibit the company’s ability to conduct effective investigations on any matter in the future,” said Nilekani, largely sticking to scripted remarks that were also published in the company’s statement on Tuesday.

“Let me say that the investigations were regarding the (Panaya) matter and we’ve said that there is no merit in the allegations of wrongdoing. That’s what we’ve said…I think if you look at the actions of the last 60 days, you would’ve seen that what needed to be done has been done,” added Nilekani.

The company’s latest stamp of approval on the Panaya investigation also raises the prospect of further questions from investors, who still have no clarity on the contents of the Panaya investigation. Murthy, who has demanded that the report be made public, said on Tuesday he stood by “every question on poor governance raised in my speech to Infosys investors dated August 29, 2017.”

Nilekani’s declaration has also raised questions on whether Murthy’s crusade against the previous board and Sikka was a futile exercise at the end.

Nilekani, for his part, declined to comment when asked by Mint on why the recent board overhaul was conducted when there was no evidence of wrongdoing in the Panaya deal or any other major corporate governance lapses.

“I don’t want to get into that. I really don’t want to waste my time on that,” said Nilekani, who also declined to comment on whether Infosys had spoken to Murthy on the decision to not release the full report on the probe of the Panaya deal.

Experts and proxy advisory firms also raised questions on why the recent board overhaul was undertaken if there was no wrongdoing.

“If there was no wrongdoing, the need for bringing about a change to the board in August is not clear,” said Shriram Subramanian, founder and MD of proxy advisory firm InGovern Research.

Over the past three months, Infosys has witnessed unprecedented turmoil, having had to deal with the exit of the CEO, the chairman, and a complete overhaul of the board.

Emails sent to Sikka also went unanswered.

“Has Vishal been vindicated? Short answer is yes,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm.

Over the past year-and-a-half, Murthy has repeatedly attacked previous chairman R Seshasayee and other board members over issues of poor corporate governance.

Some of the decisions that were questioned by Murthy were Infosys’ decision to buy Panaya, the board’s decision to give a generous severance of Rs 17.38 crore to its former chief financial officer Rajiv Bansal, and another unusual severance payout to its former chief legal officer, David Kennedy.

“The fact remains that none of these questions have been answered by the Infosys board with the transparency it deserves. I am disappointed,” Murthy said in his statement on Tuesday.