Former CFO severance pay: Infosys says no impropriety of any nature

BENGALURU: Five months after Infosys disclosed a Rs 17.38 crore severance payout, amounting to 24 months’ pay, to its former CFO Rajiv Bansal, Infosys has said that a certain part of it has been suspended pending clarifications of contractual rights and obligations. The company however, didn’t offer an explanation on the nature of clarifications awaited. But it has revealed that the board and the audit committee launched two investigations over the past one year following certain insinuations/rumours and an anonymous letter received regarding Bansal's separation. It said the investigations showed no wrong doings or efforts to cover up any wrong doings. Bansal is now the CFO at Ola.

The company has clarified that Bansal’s payment was suspended not on account of any extraneous considerations. "The severance agreement is being administered in accordance with the contractual rights and obligations. Certain payments to Rajiv under the agreement have been suspended pending certain clarifications with regard to such rights and obligations,” the company said in a statement.

The IT company signed a separation agreement with Rajiv on October 11 last year that included extended non-compete obligations, besides other rights and obligations usual for such agreements. The agreement also explicitly enabled Bansal to report to the regulatory authorities in future any matter of impropriety that he became aware of that happened during his tenure.

The first investigation was done in October, 2015, and the second in August 2016, the company said. The investigations were conducted by law firm Cyril Amarchand Mangaldas. Both investigations were shadowed by

KPMG

, the company's auditors, and revealed no wrong doings or efforts to cover up any wrong doings, Infosys said.

This investigation related to rumours that Bansal had made certain insinuations against the management. These were promptly investigated by the independent law firm, which concluded that there was no substance to any of these rumoured insinuations, the company said. It is also noteworthy that Bansal denied on record that he had made any such insinuations, the note said.

The company said the 2016 investigation comprehensively looked into the circumstances leading to the severance agreement and in particular, whether the payment was intended to silence Rajiv from disclosing any impropriety. Cyril Amarchand Mangaldas concluded that the severance payment made to Bansal was not with the intention of silencing him from disclosing any impropriety. Further, necessary approvals had been obtained and appropriate disclosures were made in the matter. The investigation was based on extensive examination of records, emails and interviews with relevant people, the company said. Latham & Watkins, legal advisors to the Board, supervised and coordinated the investigation. Latham & Watkins have confirmed the independence of Cyril Amarchand Mangaldas, the comprehensiveness of the investigation and the conclusions thereof, the Infosys note said.

KPMG too expressed satisfaction with the investigations and conclusions of the reports, the note said.

The full statement from Infosys:
Over the past weeks Infosys (The Company) has received several media queries with regard to the separation of and severance payment for Mr. Rajiv Bansal (Rajiv), the former Chief Financial Officer.

This statement is intended to provide clarity and transparency in this matter.

Terms: The Company signed a separation agreement with Rajiv on October 11, 2015. The agreement provided for extended non-compete obligations, besides other rights and obligations usual for such agreements. The agreement also explicitly enabled Rajiv to report to the regulatory authorities in future any matter of impropriety that he became aware of that happened during his tenure. The severance pay amounted to 24 months’ pay, amounting to Rs. 17.38 crores.

Status: The severance agreement is being administered in accordance with the contractual rights and obligations. Certain payments to Rajiv under the agreement have been suspended pending certain clarifications with regard to such rights and obligations. The Company wishes to clarify that the suspension is not on account of any extraneous considerations.

Disclosures: The Company has made the necessary statutory filings and disclosures in the matter. Further, the Chairman Mr. R. Seshasayee made a statement at the Company's Annual General Meeting on June 18, 2016 explaining the rationale for the severance quantum and assuring the shareholders that there was no impropriety of any nature.

Investigations: Following certain insinuations/rumours and an anonymous letter received regarding Rajiv's separation, the

Board/Audit Committee

had proactively ordered two separate independent investigations over the last one year into this matter - the first in October, 2015 and the second in August 2016. The investigations were conducted by Cyril Amarchand Mangaldas, a reputed law firm. Both investigations were shadowed by KPMG, the company's auditors, and revealed no wrong doings or efforts to cover up any wrong doings.

2015 investigation: This investigation related to certain rumours that Rajiv had made certain insinuations against the management. These were promptly investigated by the independent law firm, which concluded that there was no substance to any of these rumoured insinuations. It is also noteworthy that Rajiv denied on record that he had made any such insinuations.

2016 investigation: This investigation was ordered by the Audit Committee following the receipt of an anonymous letter which alleged that the severance payment to Rajiv was intended to silence him. The investigation comprehensively looked into the circumstances leading to the severance agreement and in particular, whether the payment was intended to silence Rajiv from disclosing any impropriety. Cyril Amarchand Mangaldas concluded that the severance payment made to Rajiv was not with the intention of silencing him from disclosing any impropriety. The agreement with Rajiv allowed him to report to the regulatory authorities in future any matter of impropriety that he became aware of that happened during his tenure. Further, necessary approvals had been obtained and appropriate disclosures were made in the matter. The investigation was based on extensive examination of records, emails and interviews with relevant people. Latham & Watkins, legal advisors to the Board supervised and coordinated the investigation. Latham & Watkins have confirmed the independence of Cyril Amarchand Mangaldas, the comprehensiveness of the investigation and the conclusions thereof.

KPMG, the statutory auditors of the Company, had conducted shadow proceedings on both investigations and have expressed satisfaction with the investigations and conclusions of the reports.

As can be seen, the Board/Audit Committee has been proactive and has diligently discharged its fiduciary responsibilities on the subject. The Board does not wish the Company to be unduly distracted any more in dealing with baseless and malicious rumours on this subject, and will therefore not make any further comments regarding this matter.