India’s second-largest IT services provider Infosys saw its shares drop by more than 12% on the New York Stock Exchange and 16% on the National Stock Exchange of India between Monday and Tuesday.
According to Reuters, it was the worst intraday drop Infosys has seen in six years.
The drop follows the company’s disclosure of two whistleblower reports it received over the last month, alleging unethical practices on the part of its chief executive officer, Salil Parekh.
In a letter addressed to the stock exchanges NYSE, NSE, and Bombay Stock Exchange on Tuesday, Infosys Chairman Nandan Nilekani said that the company had instituted an inquiry against the CEO.
Nilekani refrained from providing further details on the reports citing pending investigation but mentioned that the complaints are mostly regarding Parekh’s international business travels to the U.S. and Mumbai.
The Economic Times claims to have accessed these letters and published copies on its website.
“CEO is bypassing reviews and approvals and instructing sales not to send emails for approval. He directs them to make wrong assumptions to show margins,” one of the letters accessed by ET allege. “[Chief Financial Officer] CFO is compliant, and he prevents us from showing in board presentations large deal issues.”
The company’s internal auditor Ernst & Young, along with an Indian law firm Shardul Amarchand Mangaldas & Co., will be assisting the Infosys audit committee in the investigation.
The whistleblowers sent a copy to the U.S. Securities and Exchange Commission, in addition to the Infosys board. Investigations in the U.S. are being carried out by the law firm Kahn Swick & Foti.
[Editor’s Note: The last time Infosys faced a whistleblower complaint was during the tenure of former CEO Vishal Sikka who left in 2017 after a tussle over corporate governance with Infosys founder NR Narayana Murthy, according to The Economic Times.]
This story first appeared on Benzinga.
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Photo by Sanjeev Verma/Hindustan Times via Getty Images
Infosys campus photo by Hemant Mishra/Mint via Getty Images