Business and Finance NEWS

Credibility of Indian corporate governance: Wipro and Megasoft Joins Satyam in World Bank Blacklist

By Amarendra Bhushan for CEOWORLD Magazine Updated:January 12, 2009 Become a writer!

It looks like the world bank’s tirade against Indian companies is just pickup up steam. More companies were included the the blacklist, that would be barred from engaging with World Bank and a number of years.

The bank had already announced the debarring of Satyam.

Wipro has been excluded for four years till 2011 from getting direct contracts for providing improper benefits to Bank staff.

Another IT firm Megasoft has been prohibited for four years from 2007 from getting direct contracts for participating in a joint venture with Bank staff while also conducting business with the Bank.

The World Bank Group has decided to make public the names of all companies that have been debarred from receiving direct contracts from the Bank Group under its corporate procurement program. This change was made in the interest of fairness and transparency.

This change aligns the disclosure practice for companies that provide goods and services directly to the Bank with the current policy governing procurement on Bank financed projects in developing countries. In parallel with the Bank’s disclosure of the names of companies and individuals debarred on Bank financed projects from now on, the Bank Group will publicly list the names of companies debarred from its corporate procurement.

There are currently three companies that have been debarred along with their affiliates under the Bank Group’s corporate procurement program.

Ineligible firms are:

Satyam Computer Services, Ltd.

About: Satyam is a leading global business and information technology company, delivering consulting, systems integration, and outsourcing solutions to clients in over 20 industries.

About: Satyam is an Global IT company providing consulting services, enterprise business solutions, application development services and engineering solutions to …

Term: 8 years

Date: September 2008

Reason: Providing improper benefits to Bank staff and failing to maintain documentation to support fees charged for its subcontractors.

Wipro Technologies

About: Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. Wipro has 55+ ‘Centers of Excellence’ that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation. Wipro is the World’s first CMMi Level 5 certified software services company and the first outside USA to receive the IEEE Software Process Award.

Term: 4 years

Date: June 2007

Reason: Providing improper benefits to Bank staff

Megasoft Consultants Ltd.

About: Megasoft is a trans-national Intellectual Property driven, product-based technology company. Established in 1994 in Virginia USA & Listed in Mumbai Stock Exchange. Megasoft, a public listed company operates out of offices spanning Europe, Asia and America.

Term: 4 years

Date: Dec 2007

Reason: Participating in a joint venture with Bank staff while also conducting business with the Bank

Global software major Wipro Technologies Monday admitted that the World Bank had barred it from securing its contracts from 2007 to 2011.

‘The World Bank determined in June 2007 that Wipro would be ineligible to contest direct contracts from 2007-2011,’ the IT bellwether said in a notification to the stock exchanges.

As part of its revised disclosure policies, the company said that its inability to get business from the Washington-based bank would not adversely affect its business and results of its operations, as revenue from the development bank was insignificant.

‘In 2000, as part of our initial public offering (IPO) of American Depository Shares (ADS) to our employees and clients in the US, our representatives made an offer to World Bank employees to purchase the shares at market price under the Securities and Exchange Commission approved directed share programme (DSP).

‘The World Bank, however, directed the offer to the family members and friends of its employees. Though they purchased 1,750 shares for about $72,000 at the IPO price ($52.48), they signed a conflict of interest statement that purchasing the shares did not violate any ethics or conflict of interest policies,’ Wipro said in the notification.

‘The programme objective was to involve employees and customers with the public offering to expand our recognition and brand. A majority of the shares sold under the DSP were allotted to our employees,’ the notification added.