Source: The Economic Times
Cyril Amarchand Mangaldas, the law firm hired by Infosys to review its corporate governance practices, may have a conflict of interest in this assignment. Infosys founder NR Narayana Murthy, who alleged lowering of corporate governance standards at the company, is on the strategic advisory board of the law firm.
Experts have raised concerns over appointing a law firm with Murthy on its board, although Cyril Shroff, managing partner of Cyril Amarchand Mangaldas, said there is no conflict of interest.
“While one will be required to look at the exact role of Murthy in Cyril Amarchand Mangaldas, his presence on the board in itself may be a cause of concern. Whether this is a conflict of interest or not is subjective as we lack regulations around this,“ a corporate governance expert said on the condition of anonymity.
“The role of Cyril Amarchand Mangaldas is very important in the whole process as the law firm is trusted with giving a solution to the tussle between the founders and the board of Infosys,“ a consultant in an advisory said. “Even if there is no conflict of interest, can someone allege that tomorrow? The answer is yes.“
Cyril Amarchand Mangaldas, one of the country’s largest law firms, constituted the external strategic advisory board in 2015 to guide the firm on strategic policy and governance-related issues. Shroff, responding to a detailed questionnaire by ET, said there is no conflict of interest.
“Our external strategic advisory board, of which Mr Murthy is an honorary member, guides the firm on overall direction and highend strategy, with no reference to any client or professional matters. We have been advisors to the Infosys board for several years (long preceding Mr Murthy’s appointment on the board) and enjoy a long-standing relationship of trust with the company and its board. The board is fully aware of Mr Murthy’s position on the advisory board and there is no conflict,“ said Shroff.
He added that Infosys hired the law firm to provide expert professional advice. Infosys said on February 9 its board had recently appointed Cyril Amarchand Mangaldas, corporate governance experts, to receive from the promoters and other key stakeholders various inputs, evaluate them and make recommendations.
Infosys did not respond to a query sent on February 10 evening about the potential conflict of interest. While Murthy did not specifically reply to the query, he responded with a “thank you“ and copied it to Shroff.
The law firm’s external advisory board includes Deepak Parekh, chairman of Housing Development Finance Corporation, Uday Kotak, managing director of Kotak Mahindra Bank, Janmejaya Sinha, chairman of the Boston Consulting Group (Asia Pacific), and Umakanth Varottil, associate professor in the faculty of law at National University of Singapore.
“The board will be like a conscience keeper for the firm and they will also give us an outside-in perspective,“ Shroff told ET in an interview on August 10, 2015.
Murthy and other founders had raised concerns over corporate governance practices at Infosys, especially with regard to the huge severance pays given to some departing employees. Infosys CEO Vishal Sikka is set to meet investors on Monday.