oppn parties The Whistle Is Blown At Infosys

News Snippets

  • PM Modi tells BJP workers that India is in for a long battle against the coronavirus and there is no scope to feel tired or defeated
  • PM Modi asks ministers to focus on exports and new areas and sectors
  • PM Modi asks ministers to prepare business continuity plan post the lifting of the lockdown
  • Corona cases in India cross 4000 and the death toll stands at 124
  • The government decides to double the testing of corona suspects from 10000 now to 20000 in the next three days
  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
  • Although it was obvious, but the government still clarifies that there is no need to switch off appliances and only lights need to be switched off on April 5 at 9pm after confusion in the minds of some people
  • PM Modi and President Trump decide "to deploy full strength of (Indo-US) partnership" to fight against COVID-19
  • 17 states have reported 1023 cases of coronavirus linked to the Tablighi Jamaat, which translates to 30% of all positive cases in India
  • The government says people should not use alcohol-based hand sanitizers before lighting diyas or candles on April 5
  • The railways say there is no certainty yet when services will resume after the lockdown and a final decision will be taken in the next few days
  • As coronavirus cases multiply in Assam, six north-east states seal their borders with the state
  • Power System Operation Corporation Ltd. (POCOSO) putting all systems and protocols in place at war-footing to ensure there is no grid failure due to reduction in demand on April 5 at 9 pm
  • Power ministry scotches rumours that the power grid might fail due to the 9-minute blackout called by PM Modi on Sunday, April 5
  • Centre asks people to wear home-made masks if it is absolutely essential for them to step out of homes
26 nurses and 3 doctors test positive for COVID-19 at Wockhardt Hospital in Mumbai, facility cordoned off, no entry or exit permitted from the hospital
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The Whistle Is Blown At Infosys

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.

Questions have been raised about the accounting and disclosure policies of hitherto one of India's best-governed companies. A whistleblower has complained to Sebi that the Infosys board has fudged accounts and made selective disclosures to make the position of the company look rosier in the near term. This is a serious charge that can have global ramifications as the ADRs of Infosys are traded in the US. Already, a few US law firms have initiated class-action suits against the company and the US SEC has approached Sebi for clarifications.

The response of the Infosys board has been predictable. It has involved its internal and external auditors to deny any dressing up of accounts. It has also prepared for legal help. But, despite not knowing the exact nature of the allegations made by the whistleblower, it needs to be said that the incident shows Indian disclosure norms and accounting standards in poor light.

The top four accounting firms in the world are already in the dock for allowing several companies to present their account in a way that actually hid the critical position they were in and for overlooking certain transactions between companies of the same promoters. If, on top of this, companies choose to selectively disclose certain facts, it amounts to cheating the shareholders and the larger public that trades in the shares of the company on the bourses.

Even if Indian accounting and disclosure standards are lax (and the Ministry of Corporate Affairs and Sebi should immediately look into this), Indian companies, especially ones like Infosys, that are seeking to tap the global financial markets, need to adhere to standards being followed in the US and other advanced economies if they do not want to fall foul of regulating agencies and courts in those countries.

The way scams are unfolding in the Indian corporate world shows that it is necessary for the government to step in and tighten accounting and disclosure norms to bring them up to global standards. These norms should have in-built red flags which would indicate huge variations. Companies that seek investor faith should also voluntarily shore up their corporate governance policies. Since large institutions hold large blocks of shares in most Indian companies, it is their duty to ensure that such accounting and disclosure norms are strictly and scrupulously followed.