Shares in Infosys crashed 13 per cent, after an anonymous group calling itself "ethical employees" has complained to the board of Infosys and the US Securities and Exchange Commission (SEC) alleging that the company is taking 'unethical' steps to boost short-term revenue and profits and stating that the complainants have emails and voice recordings to substantiate the claims.
The shares were last seen trading around 14 per cent lower at Rs 663.
The whistleblowers have alleged that large deal approvals have irregularities and chief executive officer Salil Parekh was bypassing reviews and approvals for large deals. "In large contracts like Verizon, Intel, JVs in Japan, ABN AMRO acquisition, revenue recognition matters are forced, which are not as per accounting standards," the letter alleged.
The whistleblowers have alleged they were asked not to recognise costs like visa costs to improve profits. "This quarter there is lot of pressure to not recognise reversals of $50 million of upfront payment in FDR contract, which is against accounting practice," they complained.
The allegations remain serious and may continue to exert downward pressure on the stock of Infosys. The company's shares would also go ex dividend from tomorrow for a dividend of Rs 8 per share. Meanwhile, the Nifty and the Sensex opene dthe day relatively flat in trade.