What I've Learned About Infosys: A Tale of Treachery

Don Tennant

It's been almost exactly one year since this blog became the first U.S. media outlet to report the story of Infosys employee and whistleblower Jay Palmer's lawsuit against the company, following the harassment and retaliation he suffered after blowing the whistle on alleged visa and tax fraud. One year later, some reflection is in order.

 

I certainly didn't uncover the story - in fact, I was oblivious to it. I was pointed to it by a reader who had seen a report about it in the Indian press. I first mentioned it in this space on March 13, 2011, in a post headlined, appropriately enough, "Yes, We in the U.S. Media Are Lousy at Covering H-1B Visa Abuse." On March 15, following my first of what would be many conversations with Kenny Mendelsohn, Palmer's attorney, I filed a post headlined, "H-1B Visa Fraud Case Against Infosys May Be a Game Changer." As anyone who has read this blog with any regularity at all knows, I have since become more convinced of the game-changing nature of this case with each passing day.

 

I had been following the case for nine or 10 months when a friend of mine asked me what's the one thing about this case that bothers me the most. I wasn't able to give him a meaningful answer, because I've seen so much documented evidence of so much blatant, willful deception on Infosys' part, and so much arrogant disrespect for U.S. laws and the U.S. justice system, that it was impossible to identify one particular thing that, of everything I had become aware of, I found the most troubling. After some reflection, however, that changed.

 

It all crystallized during a recent discussion I had with Ben Dattner, a professor of psychology at New York University and author of the book, "The Blame Game: How the Hidden Rules of Credit and Blame Determine Our Success or Failure." Dattner contends that credit and blame almost always lie at the heart of any workplace dysfunction. It was in that context that I conveyed my own observation that we tend to admire people who have the courage and willingness to accept blame and hold themselves accountable, while we tend to be put off by those who blame others in trying to conceal their own faults and mistakes.

 



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Mar 5, 2012 3:42 AM R. Lawson R. Lawson  says:

(paraphrasing) Don:  "Infosys  ... had established a program under which its employees are encouraged to speak up ... and ensured they would be kept safe ... What happened next is what's so especially troubling. Infosys ... pulled the rug out from under Palmer. "

Policies are meaningless if they are not enforced - and in this case probably more harmful had it not existed in the first place.  Their actions have caused permanent damage because nobody at Infosys and probably any other Indian offshore outsourcing firm will want to blow the whistle after what they did to Jay.  It boils down to trust, and there is very little to go around right now.

I think there is an even greater underlying issue Don.  That issue is deception and a tolerance that the IT industry has for deceptive practices.  Just look at all the timely "studies" that get released anytime there is unfavorable industry related news.  They are willing to say anything no matter how untrue it is.

Did they have these whistle blower policies in place because they wanted to make sure employees informed management when something bad was occurring, or did they just want to appear like a responsible company to investors or regulators?  I think it is more for show - and another example of deception.

It's a culture of corruption.  You can pen policy all day long but unless that culture is broken nothing will change.  That culture will not be easily broken so long as the IT industry is tossed softballs by the press (present party excluded - I think Don has not shied away from asking tough questions). 

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Mar 5, 2012 4:26 AM Richard Richard  says: in response to R. Lawson

Well our personal views and judgements wont have any use if Infosys escapes scott free in August this year. So instead of putting up our opinions on this blog will it be possible for us to get direct updates from the attorneys as to which side is winning out of the two.

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Mar 5, 2012 4:33 AM Culture of Corruption Culture of Corruption  says: in response to R. Lawson

A key point missing here is the culture under which this occurred.

In places like India and China, where a lot of outsourcing occurs, the view of business ethics is entirely different from that in the US. When a US firm works with an Indian outsourcing firm, they should expect the level of business ethics which is found in India. When outsourcing manufacturing to China, the expectation should be of the business ethics which are standard in China.

In India, one needs to bribe to get almost any government service and ethics in business, as they are seen in the West, are almost entirely missing. When Indians are sent to the US to conduct business on behalf of an Indian company, US companies should expect this same the level of business ethics that are experienced in India.

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Mar 5, 2012 5:33 AM R. Lawson R. Lawson  says: in response to Culture of Corruption

I wouldn't be quick to label a culture of corruption an "Indian or Chinese thing".  Just look at our own companies in this country that work behind the scenes through lobbyists and even what I believe are front groups (NFAP) in an attempt to leave no fingerprints.

Frankly, the Indian companies have the least political influence in this country - probably even less than us (as hard as that is to believe).  If we can't beat them and get a bill like Durbin-Grassley passed we have no chance against American companies.

I agree they are probably more corrupt in India, but their corruption has less of an impact than the less obvious American corruption.  What makes our corruptions so troubling is that it is institutionalized - with K-Street and Wall Street being extensions of the beltway. 

Groups like NFAP get to avoid restrictions placed on lobbyists by posing as a research 501-3c organization.  Their donors - who remain a mystery - are able to write off contributions so we tax payers refund half of their back-door efforts to lobby Congress.  And they legally, it appears, aren't required to disclose where their money comes from.  If that's not institutionalized corruption, I don't know what is.  Now toss in the media - 90% of which is owned by decedents of fewer than 10 families.  They are on the inside of the institution looking out, not outside looking in.

I fear an institution of corruption by people who are part of that institution far more than I fear the corruption of outsiders.  If anything, the institution will throw India Incorporate under the bus so they can pretend to have solved all of our H-1b woes.

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Mar 5, 2012 5:53 AM Culture of Corruption Culture of Corruption  says: in response to R. Lawson

R. Lawson, you dodged responding my actual point. Corruption as it is on the everyday level in society is what impacts the lives and motivations of everyday people within a business.

If you compare day to day corruption in the US to in India and see them as similar then I am sure of one of two things, either that you have never been to or worked in India or you are speaking as if you are from the US but are actually from India and you are demonstrating my point by blatantly lying.

At the governmental level this is also similar, if you worked have actually worked with the governments in India and the US and you consider the level of corruption to be even similar then you are again either uninformed or being dishonest. The level of corruption in India is way beyond that in the US, it is barely even comparable.

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Mar 5, 2012 6:09 AM R. Lawson R. Lawson  says: in response to Culture of Corruption

"R. Lawson, you dodged responding my actual point."

OK, I'm not one to dodge.  So let me try again...

"Corruption as it is on the everyday level in society is what impacts the lives and motivations of everyday people within a business.  If you compare day to day corruption in the US to in India and see them as similar ..."

I'll leave my nation or origin a mystery... though most people reading this post know   It just tickles me what you said so I want to drag this on a few more minutes  

I didn't miss your point in my first post; I understood what you meant even if I didn't address it directly.

So to clarify my view on that, I would agree that Indian companies are probably more corrupt.  However, I stand by my view that our own corruption in our own country has a far more significant impact on us (American workers) than corruption Indian companies have on us.

If we could get decent representation by own own countrymen we wouldn't have this problem, would we? 

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Mar 5, 2012 6:18 AM Culture of Corruption Culture of Corruption  says: in response to R. Lawson

You have again not addressed my point or its basis. I do not know whom you are but my question was your basis for fully understanding the level of corruption.

Of course the government in ones own country impacts them more than the actions of those from another country working in that country. This though does not have bearing on my original point that this corruption of mid-level employees should be expected.

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Mar 5, 2012 6:31 AM R. Lawson R. Lawson  says: in response to Culture of Corruption

I didn't realize you were still on that because I agree that they are more corrupt based on what I have seen here within our own borders... and no I have never lived or worked in India.  But I already conceded that I believe them to be "more corrupt".

And again, my point is that even if Indian companies are the most corrupt companies on this planet, I believe their impact on our nation is limited to their presence here - and they are greatly outnumbered by companies from our own country so their overall impact is probably most felt in the IT industry where it is concentrated most.

That isn't to say we ignore their bad behavior.  However, what I believe is most likely to happen is a bill like Durbin-Grassley gets passed, everyone points their finger at the Indian companies as the only source of abuse, and it is business as usual.  People like yourself who, to my knowledge, haven't been active on this issue for over a decade, will vanish.  Back to the land of Jersey Shore and Survivor.  I want your attention on this issue after India Incorporated gets their likely slap on the hand.

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Mar 5, 2012 7:22 AM Culture of Corruption Culture of Corruption  says: in response to R. Lawson

You are accurate, I would like to see more focus on the rights of whistle blowers in the US but I do not see it happening. The lobbying power of top tech firms is too strong to allow for it to happen. On the outsourcing side as well, the clients often turn a blind eye as long as they can get lower cost resources.

I also agree that many corporate whistleblower policies are aimed more at the company having a heads up on issues before they are made public than on an actual interest in fixing them.

How more specifically would you see those with interest pushing for stronger whistleblower protections?

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Mar 5, 2012 8:06 AM R. Lawson R. Lawson  says: in response to Culture of Corruption

The problem isn't an abundance of whistle-blower or anti-fraud policies.  Most companies have them. 

What we need are meaningful penalties and incentives for people to come forward (for example, a significant percent of damages recovered in the case of fraud).  We also need accountability and for the crimes they commit on behalf of the corporation. 

I also think we need the corporate equivalent of the death-penalty.  That means you bar board members and executive staff from running other publicly traded corporations for life on a case by case basis - and the government seizes all corporate assets, revoke the contracts of senior executives (withholding their compensation) and pay back shareholders whatever remains after the company is forever dissolved.  That should be for serious and repeat offenders - but it would send a powerful message. 

We aren't tough on corporate crimes.  They want person-hood status - so let's give them what they asked for and start treating their crimes the same way we treat the crimes of people.

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Mar 5, 2012 9:39 AM R. Lawson R. Lawson  says: in response to R. Lawson

It occurred to me since my last post that there also needs to be a degree of forgiveness when companies set up internal policies and make a good faith effort to address the problems a whistle blower brings to their attention.

I believe in being tough on crime and making sure a company doesn't profit from that, but I also want conditions to be such that companies aren't afraid to do the right thing. 

I think we should more aggressively punish cover-ups and retribution, but also allow things to be handled internally when possible.  For me the keyword is "good faith" and that there is an earnest attempt to stop fraud and abuse.

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Mar 5, 2012 11:10 AM weaver weaver  says:

Good post Don,

The thing about the SEC is that it seems their function these days is to keep the corporation out of the criminal courthouses.

MF Global anyone?

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Mar 6, 2012 1:17 AM Da Truth Da Truth  says: in response to weaver

No business ethics for this company based on number of lawsuits against them. Their peers are probably similar.

However, Indian media and organizations(even some based in USA) are doing propoganda, obviously Infosys PR engine and executive contacts is helping.

American media is so silent and only 1 senator supporting this. Might just die with a whimper unless major media and political parties don't take it strongly...

Maybe some petitions can be started through change.org

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Mar 6, 2012 8:52 AM Don Tennant Don Tennant  says:

Reply to James Wattson: I have deleted your comment because it contains personal insults.

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Mar 6, 2012 11:20 AM jake_leone jake_leone  says:

There are many myths about corporations.  One myth, I run into a lot, is that corporations won't do things that run against sensible policy.  The reason given is that Capitalism will weed out corporations that do such things, because it doesn't make business sense.

Companies that do unprofitable things die, companies that do profitable things live.  This unproven hypothesis, serves as the model for even the smallest corporate dealings.  The real system has more vibrations, more back and forth.  But sadly using this Social Darwin principle, business are seen as unwavering pillars, made of stone, with no vibration, no wavering, which is a completely unrealistic model.

In this case, the settlement with Jay would be very small.  Even keeping Jay involved with projects so that he can get a good bonus, seems do-able.  Doesn't that make the most business sense?  You'll save hundreds of thousands of dollars (possibly millions if the government successfully prosecutes you for tax fraud).

The reality is Social Darwinism does not apply, because of elasticity (like that seen in a guitar string), to real world business interactions.  There will always be vibrations in the material that causes the system to waver. 

Social Darwinism is a poor re-application of Darwin's theory.  Because, animals are never perfectly suited for their environment, many animals still die because of the environment.  In fact, few animals in the wild live out their potential lifespan, and only a few off-spring live to adulthood.  Imagine if out 20 kids one lived to adulthood, and that was the case for say 60% of the U.S. families, most of the rest had say 2 (or none) of 20 kids living.

Darwin's principle is more accurately stated that animal's evolve so that they pass on their DNA to at least one living offspring.  Billions of their offspring could die in agony, it's ok, so long as one lives.

Would we find that an acceptable system?  I don't think so.  I think it would cause violent revolution.  People are above Social Darwinism, why should we except such nonsense from our leaders?

Applying the same to Detroit, which is making money this year.  What would Social-Darwinism have given us?  Probably 2-3 million more unemployed.

A more accurate statement of corporate dealings is that memes give birth to engrams in our mind.  (and there a millions of conflicting memes every business operations) And it doesn't matter how unprofitable the meme/engram system is, so long as the meme lives to reproduce, then it is ok.  Millions of U.S. citizen can lose their job, so long as one meme (or memes) lives to reproduce.

So my relevant point is this, I agree what happened to Jay treacherous.  InfoSys is a mass of conflicting impulses and we are seeing it plainly in this case.

It seems in the Quantum world of Corporate interaction, time can run backward,  objects can ignore sensible pathways and plow through one another, words (apparently) can exist in any of several states of definition (depending on what legal face you hire). 

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Mar 6, 2012 12:03 PM R. Lawson R. Lawson  says: in response to jake_leone

"In this case, the settlement with Jay would be very small. Even keeping Jay involved with projects so that he can get a good bonus, seems do-able. "

I found their approach quite perplexing. It seems to me that their legal counsel had it right to begin with (and encouraged Jay to use the whistle blower policy) but something changed - not sure what.

Had they simply followed their own policy, this would have probably been a non-incident. They would have conducted an internal investigation and at least give the appearance that they are fixing things, and it would be business as usual.

I wonder what event caused this to transition from an unknown internal issue to escalate where it is now: international news and possible criminal prosecution.

So you are right Jake. Their actions in this case don't appear to be in their best financial interests. Was it hubris? It's almost like they played it out as if they were operating on their own turf. I can see it going down like this in India because corporations have powers there that we would have a bloody revolution here over. Maybe they just don't get how business is done here. Puzzling - because they have American legal counsel.

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Mar 7, 2012 4:42 AM Richard Richard  says: in response to ROWview

@ Row view, Before making statements pls note that Infosys is an untouched corporate fraud firm at the moment. The moment it is touched and exposed it wont be any less than a Satyam or an Enron. You wrote - "minor corporate misconduct". No its not minor. Its a major misconduct. If not aleast potential 1 Billion dollar worth fraud since 2009 when visa restictions came into effect.

You wrote - "Visa law, particularly around Business Visas as many have pointed out is fairly ambiguous, and depending on how you interperet the grey area you would likely find offenders in maybe half of companies that use B visas". These cheat Indian companies know all rules and they just use loopholes to extract more dollars from United States and even after Infosys was told about it the company did not bother to do anything and simply threatened Jack. So dont assume that Infosys is any saint company.

Yes Dan should probably provide current statistics and proceedings of this case so that we on this blog get more current information

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Mar 7, 2012 5:39 AM Don Tennant Don Tennant  says: in response to Richard

For the umpteenth time, my name isn't Dan. I have a son named Dan, a brother named Dan, and an uncle named Dan, but my name is not Dan. It's Don. (Come to think of it, I also have a son named Don and an uncle named Don. Now even I'm confused.) Anyway, I don't know what "statistics" you're referring to, but EVERY development in the proceedings of this case that can be publicly released has been documented in this blog (and, more often than not, EXCLUSIVELY in this blog). That's not to mention the fact that a lot of information that was NOT intended for public release has been documented exclusively in this blog. I can't guarantee that there will never be a development in the proceedings of this case that won't be documented here exclusively or first, but I'm comfortable with my track record so far. So you can pretty much bet that if there is a development in this case that can be made public, you'll see it here.

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Mar 7, 2012 6:33 AM ROWView ROWView  says: in response to Richard

Would you also consider American companies who know all the rules and use loopholes in the federal corporate tax code to avoid paying taxes in the United States cheats? Because thousands of American companies do exactly that by setting up offices in countries like Switzerland, and in doing so extract more dollars from United States (in taxes and jobs). You know what those companies are doing? Finding ways, albeit through loopholes, to be more competitive, which is exactly what Infosys is doing! You know the great thing about loopholes, is that while they may not follow the intent of the law, there is absolutely nothing illegal about them!

I am 100% against illegal corporate action that hurts the United States, and if Infosys broke the law they should be penalized, but if you are expecting Infosys to get tossed out of the United States on its backside, you will be horribly disappointed. The worst consequence Infosys will face is some bad PR, but the only significant result of this case will be a change to the US visa law to potentially close said loophole, and probably an out of court settlement with Palmer that we will never hear the details of.

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Mar 7, 2012 7:54 AM ROWview ROWview  says:

I have been following this story for the last few months via this blog, and while I appreciate that a blog can be used to express personal views (as opposed to traditional media channels that must maintain objectivity), the increasingly emotional tirades by Don has completely eliminated the legitimacy of his "journalism". I mean, "treachery"? Really? Could he be any more dramatic about a potential case of relatively minor corporate misconduct? Visa law, particularly around Business Visas as many have pointed out is fairly ambiguous, and depending on how you interperet the grey area you would likely find offenders in maybe half of companies that use B visas. This is nothing new! And if this is to be a platform where new information is shared regarding this case, how about speaking to sources other than Jay Palmer's lawyer, who would CLEARLY express a heavily biased view, seeing as he will financially benefit from either a settlement or ruling in Mr Palmer's direction.

Obviously, Mr Tennant can do as he pleases with this space, blogs are valuable largely due to the lack of editorial interference, but in blending a highly emotional point-of-view with reportage the result yields absolutely no value at all.

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Mar 7, 2012 8:15 AM Don Tennant Don Tennant  says: in response to ROWview

I appreciate your comment, but you seem to have missed the point. This post has zero to do with visa law or the gray areas of visa abuse. This post was about Infosys pulling the rug out from under Palmer, which is absolutely a treacherous act. I stand resolutely by that conviction. It's inexcusable. I would also point out, as I've done any number of times before, that I can't understand why anyone would bother reading this blog if he finds no value in it. It is required reading for no one. Go read something that you find worthwhile. Life is too short to waste your time with something that delivers no value to you.

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Mar 8, 2012 1:09 AM Douglas Wardle Douglas Wardle  says: in response to Culture of Corruption

American companies operating in or outsourcing to India must expect the level of business ethics found in India. That seems reasonable, although from personal experience in the sub-continent that expectation can be extremely vexing.

However, to state "When Indians are sent to the US to conduct business on behalf of an Indian company, US companies should expect this same the level of business ethics that are experienced in India." While that may be pragmatic, it certainly is a double-standard.

In my own experience, developed as a consul, the prevailing ethos regarding obtaining visas to Western countries is that the process is simply a bureaucratic hassle that is best addressed by prevarication, lies, graft, and non-adherence to the terms of the visa. In some respects, Western countries bring this abuse on by implementing application requirements that are at best a frustrating experience with bureaucracy.

I obtained an L1A visa to the US (I'm Canadian, although of course an alien under US law). My first application, for a one-year visa, required 550 pages of supporting documentation. The next year the visa renewal required 680 pages of documentation. As someone who issued visas, I can state with some confidence that there is no way a visa officer has time to review that volume of documentation: more likely it seems to weigh enough....

In 1919, when my grandparents immigrated to Canada from the UK, one went to the harbor and boarded a ship. Monday, was Canada, Tuesday Australia, Wednesday South Africa, etc. With the ponderous immigration bureaucracy, including the legal profession, that has developed during the past few decades, it's no wonder that illegal immigrants take the path of least resistance. Immigration & visa law has become so complicated that Americans should rightly question the value of the program.

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Mar 8, 2012 12:56 PM Richard Richard  says: in response to ROWView

Well even if that potential loophole to close US visa issue abuse is taken care of then that is also a welcome step

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Mar 10, 2012 12:30 PM Don Tennant Don Tennant  says:

Response to Wakjob: I am no longer willing to deal with the incivility. I deleted your comment because it is uncivil. Keep it noble.

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Mar 13, 2012 10:04 AM theyrliarsandcheats theyrliarsandcheats  says: in response to Don Tennant

and the truth shall set you free....Truth - justice - and the American way.  Am looking forward to telling the whole truth, nothing but the truth, so help me God.

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Mar 25, 2012 11:40 AM jrogers222 jrogers222  says:

Infosys covered in CNN

http://money.cnn.com/galleries/2012/news/companies/1203/gallery.greatest-entrepreneurs.fortune/11.html

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