In Letter to Employees Vishal Sikka Refutes Fresh Panaya Charges

Sikka said that the IT major takes whistleblower charges seriously and there is process to investigate complaints

Infosys MD & CEO Vishal Sikka (Photo Courtesy: Sajeet Manghat/BloombergQuint)

Infosys Ltd's Managing Director and Chief Executive Officer Vishal Sikka, in a letter to employees on Monday, refuted fresh allegations that the company had overpaid for an Israeli software firm Panaya Ltd in 2015 – its second largest acquisition.

"These speculations and fabrications are clearly designed to tarnish our reputation and they specifically target our employees, including myself, to the point of harassment", Sikka said in an emailed note to his employees.

According to a report in Mint earlier on Tuesday, a whistleblower has written to market regulator Securities and Exchange Board of India (SEBI) alleging irregularities in Infosys’ acquisition of Panaya in February 2015. In the latest email, the whistleblower has alleged that the $200 million that Infosys paid for Panaya was 25 percent more than what the firm was valued at a month before the acquisition in a Series E funding round.

Also Read: Infosys CEO Sikka Slams ‘False’ Stories About Panaya Deal

Sikka said that the IT major takes whistleblower complaints very seriously “and there is due process to investigate any complaint" received by the company.

The company also released a separate media statement, re-iterating that “no member of the Infosys management team was involved in any prior investments in Panaya”. The statement called “misleading and slanderous” the allegations suggesting that some members of the Infosys management team benefited from the acquisition, and outlined the circumstances under which the deal was approved.

In the case of Panaya, all the requisite steps were followed, the company said in a statement.

The valuation was done by Deutsche Bank, the financial and tax due diligence was done by one of the Big Four firms and legal diligence was done by a leading law firm – Kirkland & Ellis. The management presented the rationale behind the acquisition -- including synergies and business potential to the Board, along with necessary reports and findings. The Board deliberated the acquisition, and unanimously approved the investment which was well within the valuation range determined by the evaluator. 

Infosys Statement

Also Read: Infosys Founders, Don’t Forget the Controversies During Your Time

File photo of Infosys Chief Executive Vishal Sikka (Photo: Reuters)

Over the last month, three founders of Infosys, led by NR Narayana Murthy, had raised issues of corporate governance at the company, especially with the compensation given to Vishal Sikka and the severance package of former Chief Financial Officer Rajiv Bansal. During the time, there were also reports suggesting that Bansal had raised objections to the high valuation of the Panaya acquisition.

Sikka, in his letter, urged employees to rise above these distractions, which are "expensive, draining and time-consuming" burden on the company.

Change is never easy, and change at the scale that we are undertaking may be unprecedented, and perhaps it is this change that has so inflamed some into trying to drag us all into the mud. And yet, change we must. There is no other way.

Vishal Sikka’s Letter To Employees