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World Bank bars Satyam for 8 years
December 24, 2008 02:15 IST
Last Updated: December 24, 2008 09:27 IST
The World Bank has barred Satyam Computer Services [Get Quote] from doing any business with it for the next eight years even as the share prices of India's fourth-largest IT firm tanked 13.5 per cent on rumours that B Ramalinga Raju, founder and chairman, has resigned.
Speculation was also high on news that Wipro [Get Quote] Technologies, India's third-largest IT firm, might acquire Satyam, something both companies denied.
Foxnews.com on Tuesday reported that the World Bank ban started in September this year "due to alleged malpractice's including bribery". The news report said the World Bank debarment -- the harshest sanction ever made by the bank since 2004 -- was meted out for 'improper benefit to bank staff' and 'lack of documentation on invoices'.
"The information is true," Sudip Mozumder, a spokesman for the World Bank in New Delhi, told Reuters. Moreover, Robert Van Pulley, the information security official, admitted to the ban during a recent meeting with officials of the Government Accountability Project, a 30-year-old whistle-blowing organisation based in Washington.
When contacted, a Satyam spokesperson said that "the company does not comment on individual clients".
According to reports throughout 2003 to 2008, the World Bank has paid Satyam hundreds of millions of dollars to maintain and manage its software systems across global networks as well as look at back-office operations.
In 2005, the bank's chief information officer, Mohamed Muhsin, was asked to leave after being accused of improperly buying preferential stock options from Satyam, even as he awarded the firm major contracts. A top-secret investigation led to Muhsin being banned permanently from the bank in January 2007.
Satyam has been in the line of fire since it made an attempt to acquire Maytas Infra and Maytas Properties for $1.6 billion that are partially owned by the promoter family. Within 10 to12 hours of this announcement, the company retracted its decision due to investor outrage.
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