The Hindu Business Line : World Bank reveals Wipro, Megasoft were barred, too

Bangalore/New Delhi/Mumbai, Jan. 12 In a further setback to the Indian IT sector, the World Bank made public it has barred Wipro Technologies and Megasoft Ltd since 2007 from receiving direct contracts under its corporate procurement program.

The Bank said Wipro’s offer of American depository shares (ADS) to its staff as part of public offering in 2000 was against its policy and it banned the vendor till 2011.

The Bank made public the names of debarred companies on January 11 under the new disclosure policy, stating the “change (in policy) was in the interest of fairness and transparency.” Analysts said the Bank’s move could have been prompted by the Satyam episode.

It banned Megasoft Ltd for four years from December 2007 for participating in a joint venture with Bank staff while working with the Bank. Earlier, it put a ban on Satyam currently in the news for Rs 7,000 crore accounting fraud.

Tracking disclosures, Wipro stock fell by a tenth to close at Rs 227 on the BSE in a weak market on Monday, reflecting increased apprehensions amongst shareholders in the backdrop of the Satyam fiasco.

‘No wrong committed’

“We have not done anything wrong or unethical,” said Mr Girish Paranjpe, joint-CEO of Wipro Technologies. “We had issued ADS to employees and clients at market price under Directed Share Program (DSP) that was approved by the Securities and Exchange Commission (SEC),” he said, adding the measure will not have any material impact on the company.

Under Wipro’s DSP, about three World Bank officials and their families and friends had purchased 1,750 ADS for about $72,000 at the IPO price. About 80,000 ADS, accounting for less than a per cent of the issue size of three million, were offered to employees and various other clients as part of the DSP, as a goodwill gesture, Mr Paranjpe said.

“All participants in the programme signed a conflict of interest statement saying that their purchase did not violate any ethics or conflict of interest policies of their company,” Wipro said.

SEBI sources said the shares allotted to World Bank employees under DSP were approved by SEC.

Small client

On why Wipro did not proactively reveal when it was barred in 2007 itself, Mr Paranjpe said “World Bank has not been a big customer and not been a current customer for past three years. The matter was closed and we were not pursuing business with them.” Wipro earned about a million dollars from World Bank in all these years.

No impact: Megasoft

Meanwhile, the Megasoft Managing Director and CEO, Mr G.V. Kumar, said his firm has had no business from World Bank since 2004 and hence there was no financial impact due to the debarment.

“The Bank approached us in 2007 seeking details about Megasoft China operations and we gave them all details. We had by then even shut down our China operations. They objected to us having a joint venture with an ex-employee of the World Bank and chose to debar us on that ground.”

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