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Narayana Murthy Draws Fire from Infosys Board; Founder Blamed for Sending Vishal Sikka Out the Door

“The constant unsubstantiated allegations caused substantial damage to the morale and culminated in the departure of Sikka,” Venkatesan told investors in a conference call on Friday morning.

Tushar Dhara | News18.com

Updated:August 18, 2017, 4:17 PM IST
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Narayana Murthy Draws Fire from Infosys Board; Founder Blamed for Sending Vishal Sikka Out the Door
Vishal Sikka had taken over as Infosys CEO in June 2014. (GettyImages)
New Delhi: Ravi Venkatesan, Co-Chairman of the Infosys Board of Directors, hit out at founder Narayana Murthy over “unsubstantiated allegations” against Vishal Sikka and the Board, aligning the top management of the company against the founder.

“The constant unsubstantiated allegations caused substantial damage to the morale and culminated in the departure of Sikka,” Venkatesan told investors in a conference call on Friday morning.

He added that three sets of investigations to probe the allegations had not turned up anything.

In a separate statement, the Board also said Narayana Murthy had used the threat of media attacks to make inappropriate demands that were “inconsistent” with his stated desire for stronger governance and that it had no intention of offering him a formal role in governance.

“I just cannot do this anymore, I want to leave,” Vishal Sikka said on the call. “In the last 4-5 quarters, but particularly since January or February, the constant drum beat of allegations was absolutely sickening. Whenever I would wake up at home in California there was a regurgitation of the same allegations and that made it difficult to carry out the change agenda,” Sikka said.

Sikka said that the constant allegations over the past year had made his continuation as CEO of Infosys impossible.

Interim CEO Pravin Rao, who was also on the call, was mostly quiet and a bit nervous. With this, the Board made it clear to investors that it was siding with Sikka, the outgoing CEO, over Narayana Murthy, the founder.

Ravi Venkatesan, in his opening comments, said that while the Board had been fully behind Sikka and had adopted his vision of turning Infosys from a software services provider to an innovation-led company, the bickering between the founders (Narayana Murthy) and the management had got too much.

The co-chairman said that the Board had done everything possible to investigate the allegations levelled by the founders. “We believe we’ve done everything any good, independent Board would do. We had three separate investigations into the allegations. The latest one provided unfettered access to the auditing company,” Venkatesan said.

The call was scheduled for 11 am but was delayed by 30 minutes and went on for slightly over an hour.

Analysts from big brokerage firms like Credit Suisse, JP Morgan and Edelweiss were on the call. Most of the investors indicated that they were sorry to see Vishal Sikka go.

Pravin Rao said he echoed the comments made by Venkatesan and Sikka and termed the turn of events unfortunate. “We have a strong leadership team and a strong vision,” he said.

Ravi Venkatesan said that the vision that Vishal Sikka had brought with him for Infosys had the full support of the Board, comments which may not go down well with Narayana Murthy, who still holds a large chunk of Infosys shares.

A significant number of questions from the investors revolved around stability of the company and whether the Board of Directors was equipped to the task of guiding the company.

A question directed towards Venkatesan asked him how the Board would solve the friction between the founder and the CEO. To this, he replied that dialogue between the Board and the founder had worked partially, it had also failed at some level.

However, he reassured the investors that the Board and the new team would work to improve the confidence of investors, shareholders and employees.

Venkatesan said that a new CEO would be appointed by March 31, 2018 and that Pravin Rao will report to Vishal Sikka till then.
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