The IT company Coforge reported that the audit results were not fully presented to the board members. According to the company's statement, the reports were only available to OP Bhatt and NRC Chairman DK Singh, and the chairman's lowest rating was neither disclosed nor discussed with the full board.
Coforge specified that OP Bhatt did not share the full findings of the board evaluation report, prepared by the internal auditor, with either the board of directors or the Nomination and Remuneration Committee (NRC). This exacerbated tensions between the outgoing chairman and the company, raising serious corporate governance questions in one of India's fast-growing mid-sized IT firms.
The audit observations concern the manner in which the reports and findings obtained during the board evaluation were disseminated, presented, and discussed before the NRC and the board of directors by the NRC chairman and the chairman himself.
Bhatt, who previously served as the Chairman of the State Bank of India (SBI), was also a member of the NRC. The committee was chaired by independent non-executive director DK Singh.
Coforge stated that at Bhatt's direction, the reports were accessible only to Singh and Bhatt, and not to other board members, including independent directors.
The internal auditor's report noted that the presentation of the evaluation results (without providing copies of the reports) by the board chairman and the NRC chairman to the NRC committee and the board of directors did not cover all relevant aspects and findings. Specifically, although the chairman's category received the lowest score in the reports, this fact was neither disclosed nor discussed before the NRC or the NRC chairman and the board chairman.
On Thursday evening, the company submitted this information to the BSE. Bhatt could not be immediately questioned about these events, but earlier this week he had stated that he always performed his duties independently, objectively, and in the best interests of the company.
The internal audit was part of the company's second-quarter audit plan and examined the board evaluation process conducted under Bhatt's leadership, as well as the report subsequently presented to the directors. The audit revealed concerns regarding how the report was handled, including the incomplete disclosure of certain material information contained in or relating to the chairman's performance.
This may have contributed to the private equity firm Advent International, Coforge's largest shareholder, voting against the reappointment of Bhatt as an independent director and chairman for another five years until 2032 at the company's annual general meeting (AGM).
Bhatt, who turned 75 this year, was appointed as an independent director for three years starting May 1, 2024, and became chairman on June 29 of the same year. His initial term was set to expire in April 2027. His reappointment required a special resolution due to his age.
Advent owns approximately 20 percent of Coforge following the company's acquisition of Encora for about $2.35 billion last year.