Glare on Stater acquisition
The allegations made by the whistleblowers against Infosys CEO Salil Parekh and CFO Nilanjan Roy have also brought the spotlight on the acquisition of Stater N.V, a wholly owned subsidiary of ABN Amro Bank.
In March this year, the Bangalore-based company, had announced a strategic partnership with ABN Amro as part of which it acquired 75 per cent of Stater, which offers end-to-end mortgage administration services in the Netherlands, Belgium and Germany.
While the whistleblowers have alleged irregularities in large deal wins such as Verizon (reports had earlier said that the value of the contract was $1 billion), the September 20 letter includes the “ABN Amro acquisition” where they have accused that “revenue recognition matters are forced which are not according to accounting standards’’.
This is not the first time that an acquisition by Infosys is coming under the whistleblower glare. Back in 2017, there were allegations of irregularities in the $200-million acquisition of Israeli firm Panaya. The matter was one of the flashpoints between the erstwhile management of Infosys led by Vishal Sikka and co-founder N.R. Narayana Murthy.
However, the Infosys board under chairman Nandan Nilekani had given a clean chit to the acquisition, saying that there was no merit in the charges of wrongdoing. Infosys had commissioned law firm Gibson Dunn & Crutcher LLP and risk consultants Control Risks to investigate the allegations and the probe had found “no evidence whatsoever to support” wrongdoing by the company, its directors or its employees.
While the September 20 letter written by the whistleblowers (which is in the public domain) does not make any specific allegation about the Stater deal, Infosys had said that during the September quarter, the sequential revenue growth in constant currency was 3.3 per cent, including 90 basis points incremental contribution from Stater.
Analysts had however, felt that if one were to exclude the contribution from Stater for the period, the growth from the key BFSI vertical (banking, financial services and insurance) would have been lower.
Class action suit
US-based Rosen Law Firm has said it is preparing a class action lawsuit to recover losses suffered by investors in the wake of allegations of “unethical practices” at the IT major.