Three techies of software major Infosys were arrested on charge of cheating by unauthorisedly contacting income taxpayers and demanding money on the pretext of ensuring tax rebates, police said on Monday.

“The three were arrested for contacting taxpayers and promising to get them tax rebates in liu of 4 per cent of the total amount involved,” Bengaluru South East Division Deputy Commissioner of Police Joshi Srinath Mahadev told IANS.

Mahadev identified the accused as Renugunta Kalyan Kumar, Prakash, and Deveshwar Reddy from Bengaluru-based Infosys. “A city court has remanded them in 14-day judicial custody,” added Mahadev.

The DCP said there was a contract between the Income Tax Department and Infosys due to which company employees assigned for the I-T work were privy to information on taxpayers.

“Whatever relevant information is received, these Infosys employees forward it to the the Income Tax Department to make tax assessments and further processing,” Mahadev said.

The officer said the techies were into fraudulent activities for a month and made Rs 4 lakh through illegal means, which has since been recovered.

On the complaint by Income Tax Department officials, the accused were booked for cheating and criminal breach of trust.

A few anonymous employees of global software vendor Infosys have accused its Chief Executive Officer (CEO) Salil Parekh and Chief Financial Officer (CFO) Nilanjan Roy of unethical practices for many quarters.

“Parekh and Roy have been resorting to unethical practices for many quarters, as evident from their e-mails and voice recordings of their conversations,” said the complainants, who called themselves ‘ethical employees’ in a 2-page letter to the city-based IT behemoth’s board of directors on September 20, a copy of which has been accessed by IANS.

When there was no response from the board to their letter, an unnamed whistleblower on behalf of the unethical employees on October 3 wrote to the US-based office of the Whistleblower Protection Programme, alleging willful mis-statement material accounting irregularities for (the) last two quarters (April-September).

In response, the $11.8-billion company in a statement on Monday said the whistleblower complaint had been placed before the audit committee as per the company’s practices.

“The complaint will be dealt with in accordance with the company’s whistleblowers policy,” the IT major said in a statement to IANS.

“In (the) last quarter (July-September), we were asked not to fully recognise costs like visa costs to improve profits. We have voice recordings of these conversations,” claimed the letter.

The employees also alleged that in the quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognise reversals of $50 million (Rs 353 crore) of upfront payment in FDR contract, as it will slash profits for the quarter and negatively affect the company’s stock price. The letter said not recogonising reversals of upfront payment in FDR contract was against fair accounting practice.

“Critical information is hidden from the auditors and board. In large contracts like Verizon, Intel and JVs (Joint Ventures) in Japan, ABN Amro acquisition, revenue recognition matters are forced, which is not as per the accounting standards,” said the letter.

The employees said they have been instructed not to share large deal information with auditors.

The plaintiffs are confident of sharing the alleged emails and voice recordings with investigators when demanded.

“The CEO is bypassing reviews and approvals and instructing sales (teams) not to send mails for approvals. He directs them to make wrong assumptions to show margins,” recalled the unnamed Infoscions.

Alleging that the CFO (Roy) was hand in glove with the CEO (Parekh), the insiders said the former complied with unethical practices, restraining ethical employees from showing large deal issues to the board during presentations.

“The CEO told us, no one in the board understands these things, they are happy as long as the share price is up. Those two Madrasis (Sundaram and Prahlad) and Diva (Kiran Mazumdar-Shaw) make silly points, you just nod and ignore them,” charged the statement.

Biocon Chairperson Shaw is a lead independent director on the 10-member Infosys board, while D. Sundaram and D.N. Prahlad are independent directors.

The letters also pointed out that several billion dollar deals in the last few quarters were of nil margin.

“In (the) board meetings, we are told not to present data on large deals and important financial measures, as it will get the board’s attention,” recalled their letter.

The software engineers charged that Parekh and Roy directed them to cook the account books to show more profits in the treasury by taking risks and making changes to policies.

The whistleblower asked the auditors to properly check deal proposals, margins, undisclosed upfront commitments extended and revenue recognition.

“All information is not shared with auditors,” the letter lamented.

Noting that Parekh only spends two-and-a-half days in a week at the company’s corporate office in south Bengaluru and the remaining three-and-half days in Mumbai, the letter said all his travel expenses were paid by the company for the weekly personal trips.

“Parekh is a green card holder and avoids deduction of taxes during his US travel, which is non-compliance,” said the letter, asking the auditors to take details from the whistle-blowers.

The letter stated that the employees were being forced not to make key disclosures in 20F and the annual report, insisting on only sharing good and incomplete information with the investors and analysts.

“Whoever disagrees is sidelined and many of them leave. In the large finance team, important employees left due to pressure to make deals look good,” added the letter.

Infosys could hand out pink slips to hundreds of mid- and senior-level employees as it carries out bi-annual performance review amid a challenging business environment.

The development comes at a time when its peers Wipro and Cognizant are taking similar measures to control costs.

Interestingly, Infosys has said it will hire 10,000 Americans in the next two years and open four centres in the US as it seeks to counter moves by the US to tighten visa norms.

“Our performance management process provides for a bi- annual assessment of performance… A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback,” Infosys spokesperson said in an emailed statement.

The spokesperson did not divulge the number of people to be impacted, although reports peg the number to be in hundreds.

“We do this every year and the numbers could vary every performance cycle,” the spokesperson said, adding that the assessment is based on individual goals and strategic priorities of the company.

Last week, US-based Cognizant had rolled out a voluntary separation programme for directors, associate VPs and senior VPs, offering them 6-9 months of salary.

Wipro, too, is learnt to have asked about 600 employees to leave as part of its annual “performance appraisal” even as speculations were that the number could go as high as 2,000.

IT companies have been one of the largest recruiters in the country. However, they have warned that increasing automation of processes would lead to reduction in hiring in coming years.

While the outsourcing model has placed India on the global map, increasing scrutiny and rising protectionist sentiment are also posing challenges for the $140 billion Indian IT industry.

Companies are now working towards reducing its dependence on work visas and instead hiring more locals to ensure continuity of work for clients, even though it impacts their margins.

Source : BusinessStandard