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World Bank bars Wipro, Megasoft, 3 more firms

January 12, 2009 10:34 IST
Last Updated: January 12, 2009 12:47 IST

Even before the dust settled on the controversy involving Satyam's debarment, the World Bank on Monday revealed that action has been taken against a total of five entities in India, including Wipro [Get Quote] Technologies, and an individual.

The action was initiated against these entities and individual as they were found to have 'violated the fraud and corruption provisions of the Procurement Guidelines or the Consultant Guidelines,' besides offering improper benefits to World Bank staff.

Megasoft became the third Indian software vendor to have attracted the World Bank's ire, while Nestor Pharmaceuticals and Gap International were non-IT entities.

An individual Surendra Singh was barred from doing business with the World Bank for violating guidelines.

While Wipro was barred for four years beginning June 2007 for 'providing improper benefits to World Bank staff', Megasoft barred for an identical period beginning December 2007 for 'participating in a joint venture with World Bank staff while also conducting business with the World Bank.'

In a statement, the World Bank said that it decided to 'make public the names of all the companies that have been debarred from receiving direct contracts from the World Bank group under its corporate procurement programme.'

'This change was made in the interest of fairness and transparency. From now on the World Bank group would publicly list names of companies debarred from its corporate procurement,' the statement said.

Commenting on the World Bank action, Wipro said in a statement this morning: "Our inability to get future business from World Bank will not adversely affect our business and results of operations."

Megasoft officials too said that the debarment will not have no revenue implication for the company.

Earlier, Satyam [Get Quote], which was debarred on December 25 for eight years beginning September 2008, had demanded an apology for making public its name and withdrawal of what it called 'inappropriate' statement by the World Bank. The World Bank had refused to apologise.

In the list of 'ineligible' firms released by the World Bank, over a 100 companies or individuals -- some of the Indian-origin - have been barred temporarily or life.

The list includes Gurpreet Singh Malik, Vikram Deepak Gursahaney, Kamal Sharda and Sharda Impex (UK Ltd) in Nigeria, as well as Labh Singh Gill, Labh Universal, Pradeep Menon, Shivshanker P Nair and Pradeep S Nair in the United Kingdom and Mandeep S Sandhu in the United States.

All these entities are permanently barred.

In 2000, in connection with its IPO of American Depository Shares in the United States, Wipro offered a commonly utilised and SEC-approved Directed Share Program (DSP), which allowed employees and clients to purchase ADSs at the IPO price.

The programme's object was to involve employees and customers with the public offering to expand the recognition and brand. A majority of the shares sold under the DSP were allotted to Wipro employees.

Pursuant to this, Wipro representatives offered the World Bank, through its Chief Information Officer (CIO) and senior staff, participation in the program, Wipro said in statement.

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

However, the World Bank had determined in June 2007 the company would be ineligible for the international lender's direct contracts up to 2011, citing a conflict of interest policy.

In case of a debarred individual, the ineligibility extends to any firm which the debarred individual directly or indirectly controlled, the Bank said in its statement.

The UK and Indonesia account for a significant number of debarred entities, while a number of entities debarred are from Sweden, Nigeria and the US.

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