Why Infosys must release full report on acquisition of Panaya and Skava Systems

Many would say accountability and transparency are words that are foreign to Indian culture.

From political parties to religious bodies, sports bodies and corporates, every institution wants to maintain secrecy around allegations of corruption. That is unless they are forced by a judicial body to come clean.

The latest case that reflects this trend is Infosys turning down its co-founder NR Naryana Murthy’s demand to make public a report on whistleblower complaints.

According to Times of India, Murthy had written a letter to the Infosys board three weeks ago asking for a “full public disclosure of the report by US law firm Gibson Dunn and global risk consultancy and investigations firm Control Risks”.

The two firms, according to the newspaper report, “had the mandate to look into allegations of improprieties in connection with Infosys' acquisitions of Panaya and Skava Systems in 2015 and that the mergers and acquisitions team acted without securing proper approvals”.

Company CEO Vishal Sikka is also facing charges of requesting for improper deals with customers and receiving 'inappropriate compensation' and incurring excessive expenses on his travel, security at the Palo Alto office.

Paying lip service to the need for disclosure, on June 23, Infosys disclosed a summary of the report prepared by Gibson Dunn. The law firm said unambiguously that it and Control Risks, had not found any evidence to support any of the allegations.

Where are the proxy advisory firms?

While the management of the company can seek to behave dictatorially when it comes to disclosures and maintaining transparency, it is the job of the proxy advisory and corporate governance firms to raise a hue and cry over such matters. But in most cases related to corporate governance, such firms in India do not show any interest.

The only time, they are seen taking up the cudgels against the management is when it comes to mergers and acquisition, which can lead to immediate loss to the company shareholders.
In other, day-to-day corporate governance matters, the proxy advisories remain aloof. The general attitude in India seems to be: “If it is not about big money, we are not interested, honey”.

But it is this attitude towards transparency that allows a company's management to indulge in bigger frauds that costs investors dear.

One has to be naïve to believe that Ramalinga Raju -- the convicted CEO of Satyam Computer Services -- committed a financial fraud overnight and that none of the analysts, auditors and proxy firms knew about it.

While it is not possible to eradicate such fraudulent practices from the world, it is not very difficult to reduce the chances of fraud by forcing individuals and institutions to be transparent on everyday matters.

The Infosys management may want the world to believe that a summary of the report is the same as the overall report, in reality, there could many minute details in the report that may hint towards unhealthy conduct by the top management.

And if summaries were actually a substitute for full reports, wouldn't all investigations, research papers and all other types of documents be produced only as summaries, without any detailed analysis?