Nilekani says Panaya deal is clean

After Wednesday’s announcement that the Infosys board found no evidence of wrong doing in the $200 million acquisition of Panaya, an Israeli automation company, the reasons why the company ousted its previous chairman R Seshasayee have again come into sharp focus again. In the events leading up to Seshasayee’s stepping down, Infosys founder N R Narayana Murthy had alleged impropriety of the previous board while concluding the Panaya deal.

A statement by Infosys said: “After careful consideration led by our Chairman, the Board reaffirms the previous findings of external investigation that there is no merit to the allegations of wrongdoing.” The statement was made during the second quarter earning announcement, the first after co-founder Nandan Nilekani took over the reins of the Bengaluru-based company for the second time, following a battle between the founders led by Murthy and the management. The tussle eventually led to the sudden resignation of CEO Vishal Sikka and Infosys board was re-casted, following the resignation of its chairman and a few other board members.

Infosys founder NR Narayana Murthy had demanded that the full report by Gibson, Dunn and Crutcher on whistleblower allegations pertaining to the $200 million Panaya deal, be made public.

Emphasising that his board had taken a comprehensive review of the Panaya deal, Nilekani said: “In light of my review of these matters, I am fully persuaded, as is the entire Board, that the conclusions of the independent investigations are correct.” Infosys further said that it will not be putting out further details on the Panaya deal or reveal the probe report as such an action would “inhibit the company’s ability to conduct effective investigations into any matter in the future.”

The company also reiterated that confidentiality was key to ensuring the cooperation of whistleblowers and other participants in any investigative process. To that extent, the company said that the precedent of releasing the full investigation reports could impair cooperation of participants if a need arises in future.

Shortly after Nilekani announced to decision to put the Panaya issue to rest, Murthy made known his disappointment through a media statement. Disclosure of the Panaya report was high on his list of demands against the previous management. He had alleged that the previous management had paid an exhoribant price for the Panaya, without much due diligence and stopped short of saying that Sikka personally benefited from the deal.

In a related issue, Infosys asserted that its review had confirmed that “appropriate” and “timely disclosures” were made on severance payments to the former CFO Rajeev Bansal. In this case too, Murthy had alleged that Bansal was paid “hush” money to keep quiet on questionable practices adopted by the erstwhile CEO on the Panaya deal. He had further wanted the remaining installments of severance payment stopped.

Eight months after Infosys first agreed in October 2015 to pay chief financial officer Rohit Bansal Rs17.38 crore in severance pay, Infosys stopped the remaining payments. Infosys still has not disclosed the reasons for halting those payouts, but those actions were taken after the founders expressed their unhappiness. Infosys and Bansal are now locked in a court battle over the outstanding payments due to him.

The latest development exonerates the actions of the previous management and gives a clean chit to CEO Sikka, who made his resignation first known on twitter.

“So why did Nilekani return to Infosys? Why did Sikka leave and why was the board reconstituted? For now, there are no answers.