Infosys saga further dents image of corporate governance in India’s top firms….

Unbelievable scenes in the op echelons of India’s corporate sector. There is a simmering corporate governance crisis in firms that were once seen as Synonyms for ethical governance.

After the Tata Saga, comes the Infosys saga and this one is even more strange, The promoters of Infosys made big noises on how the firm will not be run by family members and will be run Professionally. However, in just a few years one of the promoters keeps looking for ways to come back to the firm.

Today morning Narayan Murthy’e leaked email to the Infosys Board said the current head is not fit to be a CEO but a Chief Technological Officer. There were accusations made by NRN earlier as well on governance issues in the Board.

Just a few hours ago the CEO Vishal Sikka resigned with a letter. To add to the fire, the Infosys Board lashed out at Mr Murthy and accused him as the reason for Sikka’s resignation:

It has come to the attention of the Board that a letter authored by Mr. Murthy, the Founder of Infosys has been released to various media houses attacking the integrity of the Board and Management of the Company alleging falling corporate governance standards in the Company. The Board takes great umbrage to the contents of the letter and places on record the following:

  • Mr. Murthy’s continuous assault, including this latest letter, is the primary reason that the CEO, Dr. Vishal Sikka, has resigned despite strong Board support.
  • Mr. Murthy’s letter contains factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members.
  • The Board assures its shareholders, employees, customers and communities that it is committed not to be distracted by this misguided campaign by Mr. Murthy and will continue to adhere to the highest international standards of corporate governance as it executes its strategy of profitable
    growth for the benefit of all Infosys
  • Mr. Murthy’s campaign against the Board and the Company has had the unfortunate effect to undermine the Company’s efforts to transform itself.
  • The Board has been engaged in a dialogue with the Founder to resolve his concerns over the course of a year, trying earnestly to find feasible solutions within the boundaries of law and without compromising its independence. These dialogues have unfortunately not been
  • The Board declines to speculate about Mr. Murthy’s motive for carrying out this campaign, including the latest letter. The Board believes it must set the record straight on the false and misleading charges made by Mr. Murthy because his actions and demands are damaging the Company and misrepresent its commitment to good corporate governance.

There is a long rebuttal to Mr Murthy’s claims at the end.

Meanwhile Mr Murthy responds saying it is below his dignity to respond to the Board:

People in the IT industry anyways told you the Infosys saga is hardly as rosy as we are made to believe. It was more about image management than anything else. It was surprising that despite having multiple promoters the differences did not crop up earlier. It is only when the promoters have exited from management roles, the problems are coming to the surface.

Huge questions are being asked over nature of corporate governance in both family and so called professional firms…

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