Panaya deal: Infosys' non-disparagement clause may hit disclosure

BENGALURU: The non-disparagement agreement between Infosys and its former CEO Vishal Sikka at the time of the latter's exit last week could hinder public disclosures about the controversial $200 million Panaya acquisition. The non-disparagement clause obliges the two parties not to make any negative comments against each other.

Company co-founder N.R Narayana Murthy has been demanding full disclosure of the investigation reports related to the Panaya acquisition and the huge severance payments to former CFO Rajiv Bansal and former chief legal officer David Kennedy.

Infosys' new chairman Nandan Nilekani has said he would get a full briefing on these investigations and then take appropriate action. When the question about the non-disparagement agreement was put to him on Friday, he simply reiterated that appropriate action on these investigations would be taken.

Shriram Subramaniam of proxy advisory firm InGovern said if the findings in the investigations are something in respect to dereliction of duty or impropriety, the disparagement obligation would prevent the company from disclosing the names and details of those involved. But one lawyer, who did not want to be named, said Infosys has certain obligations to its shareholders and the company could invoke that to override the non-disparagement obligation.

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Panaya has been at the centre of Murthy's attacks on the company board, and the crisis that ensued, resulting in the resignation of CEO Vishal Sikka and four of the board members, including chairman R Seshasayee, over the past ten days. The issue came up first in a whistleblower's letter. It alleged that Panaya was overvalued and suggested that some of Infosys's top executives had personal interests in the acquisition. It also hinted at a connection between this and the huge severance pays to Bansal and Kennedy. Murthy has also alleged there were serious corporate governance lapses on the part of the board in handling these issues.

The board admitted lapses in the way it went about approving the severance pays, including delayed minuting of proceedings, apologised for it, and later said that it had put in place processes to ensure similar things would not happen again. But this did not satisfy Murthy, who demanded that the full report be disclosed.