The Board of IT and BPO services company Hexaware Technologies, has announced the appointment of a special committee that will conduct an internal investigation and make recommendations for changes to its foreign exchange management practices.

This action is due to certain actively concealed and potentially fraudulent foreign exchange Option transactions conducted one Hexaware official.

The Hexaware official, who exercised unauthorised fiduciary powers, has been immediately suspended, pending investigation, a company release said.

Hexaware plans to provision between US$20-25 million to cover any potential exposure as a result of these transactions.

According to the company, the series of foreign exchange transactions in question were initiated over the last few months, and were unauthorised and outside the company''''s normal hedging program.

 Information regarding these transactions, according to a company release, was intentionally withheld from the senior management and the Board of Directors, and the company says it was even excluded from internal reports. The first transaction came to light on Thursday, 22 November, post which preliminary investigations were conducted over Friday, Saturday and Sunday, which uncovered an entire series of such transactions.

In a statement to the media, Rusi Brij, vice chairman and CEO of Hexaware said that provisioning was needed because of the direct actions of one individual "which were actively concealed." Adding further, he said "The company''''s business remains robust and its future growth trajectory unaffected. Our order book, as of 30 September 2007 stands at over US$300 million. We will continue to build on that."

The Board of Directors met at 8 am on Monday, 26 November, deciding to appoint a special committee comprising three independent directors, which will conduct a thorough investigation into the transactions:

According to Shailesh Haribhakti, Chairman of the Audit Committee, immediate steps include an embargo has on all Option deals. "Future forex deals will necessarily have to be transacted jointly by two of the four designated signatories from the top management; the company''''s authorised dealers are being informed about this procedure and the internal auditors (KPMG) are being asked to conduct a thorough audit of the function," he added. Hexaware plans to continue its normal hedging strategy to protect against the rupee appreciation.