Infosys has strongly denied that any member of the Infosys management team was involved in prior investments in Panaya as alleged by an anonymous whistleblower letter and entire process was carried out within the framework of a corporate governance.
The acquisition of Israel-based company Panaya for $200 million by Infosys in February, 2015 has generated considerable controversy with the anonymous letter claiming that due procedures were not followed and the then CFO Rajiv Bansal was against the deal.
“Insinuations that anyone from the management team at Infosys benefitted from this acquisition are misleading and slanderous,” a statement from Infosys said on Monday. However, the statement of Infosys has not provided any clarification on the alleged disapproval by Bansal to the Panaya deal as stated in the whistleblower letter.
In a point by point rebuttal, Infosys said the valuation was done by Deutsche Bank, the financial and tax due diligence was done by one of the Big four firms and legal diligence was done by a law firm – Kirkland & Ellis.
The anonymous letter had alleged that Board did not deliberate on the Panaya acquisition and Infosys had overpaid. However, Infosys said that Board had deliberated and unanimously approved the investment which was well within the valuation range determined by the evaluator.
There was an allegation that Panaya received an venture investment one month prior to the Infosys acquisition which valued the company at $162 million. Infosys noted that investment by a VC fund was not strategic, whereas it had significant synergies in acquiring a controlling stake in Panaya. “There is a premium for acquiring a controlling stake,” it said.
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On allegation that SAP co-founder Hasso Plattner was an investor in Panaya which raised the question of conflict of interest. Sikka was previously with SAP before he joined Infosys. “There is absolutely no conflict of interest due to Dr Sikka’s past professional association with Dr. Plattner,” it said.
Infosys also denied that there was any stripping of cash by the management of Panaya prior to the acquisition and also added that no loans had been given them to any of acquired company’s entities.
Terming the allegations made by the anonymous letter as libelous and aimed at tarnishing the image of Infosys, the IT major said, “Regardless of the malicious intent of this anonymous letter, the company will pursue its normal course of action and investigate the charges made.”
Infosys said it will respond to all queries received either directly or from the regulatory authorities, as per its process.