Panaya case: NR Narayana Murthy finds probe unsatisfactory; investors lose Rs 34,000 cr in 2 sessions

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Bengaluru | Updated: August 22, 2017 8:19:21 AM

Even as sources close to NR Narayana Murthy claimed on Monday, the chairman emeritus had refrained from participating in the probe in the $200-million Panaya acquisition.

NR Narayana Murthy, Infosys, Infy, Panaya case, Narayana Murthy finds probe unsatisfactory, investors lose Rs 34,000 crInfosys founder N R Narayana Murthy. (Image: PTI)

Even as sources close to NR Narayana Murthy claimed on Monday, the chairman emeritus had refrained from participating in the probe in the $200-million Panaya acquisition since he had found terms of reference unsatisfactory, the Infosys stock lost an additional 5.37% on Monday. The stock ended the session at Rs 873.50 and has lost close to Rs 34,000 crore in investor wealth across two sessions. It is no longer in the list of top ten most valued companies. The IT major’s CEO and MD, Vishal Sikka, stepped down on Friday with the Infosys board attributing the blame for the resignation to a continuous assault on him by Murthy. Sources close to Murthy told FE the international law firms engaged in probing the allegations into the acquisition of Panaya by Infosys did meet Murthy who asked them about the scope of the investigation and the Infosys executives including board members who would be interviewed.

“He was not satisfied with the responses given and felt that many executives who should have been part of the probe were not involved,” the sources said. The sources from the Murthy camp were responding to the board’s statement released on August 18 that Murthy was invited to provide any information or evidence he believed would support the allegations being investigated but he did not provide any evidence since none existed.

R Seshasayee, chairman, Infosys said at a press conference on Friday that the Panaya acquisition had been investigated as many as three times but no evidence of any malpractices had been found. “All the complaints were anonymous and none of the whistle-blowers ever produced any evidence,” Seshasayee said. The Murthy camp said that the scope of investigation seemed limited and it was felt the board wasn’t treating this case with as much importance, as Murthy hoped.

Meanwhile, analysts at Kotak Institutional Equities said Sikka’s exit sets the company on a phase of uncertainty. “Expect distractions, employee attrition and loss of revenue market share,” the analyst wrote. They cut revenue growth growth and earnings forecasts. Murthy in a statement on Friday had said, “It is hard to believe a report produced by a set of lawyers, hired by a set of accused, giving clean chit to the accused and the accused refusing to disclose why they got a clean chit!”

Murthy’s questions to the Infosys board were primarily centred around the allegations made in the whistle-blower letters. He felt that many of the key points raised in the letter have remained unanswered till now. “It is sad that Ravi Venkatesan wrote to me declining release of the information, stating that the board had closed the issue. This is an ultimate insult to shareholder democracy. I never ever imagined that governance levels would stoop down to such a low level in a company that was the most respected company till 2014,” Murthy said in a statement issued to the media on Friday.

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