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World Bank confirms Wipro is on contractor blacklist
Wipro sharing Satyam doghouse till 2011
The World Bank has revealed the full list of companies banned for bidding for future contracts because of alleged malpractice.
Troubles at Satyam took a turn for the worse when it was revealed on Christmas Eve that it was banned from applying for World Bank contracts for eight years.
Now it has emerged that Wipro, India's third largest outsourcer, has been banned from bidding for contracts directly to the bank, or to projects which it funds, for four years. The ban began in June 2007 and runs until 2011.
The third IT firm on the black list is Megasoft Consultants Ltd, barred for four years from December 2007.
The bank said Wipro was guilty of offering improper benefits to bank staff.
Wipro said it had offered customers, including World Bank's CIO and other staff, the chance to buy shares when it first floated in 2000 - Wipro is traded in Mumbai and on the New York Exchange.
The company said: "Wipro representatives offered the World Bank, through its Chief Information Officer (CIO) and a senior staff, participation in the program and they directed this offer to members of their family and friends. The aggregate number of shares purchased by them was 1,750 for approximately $72,000 at the IPO price.
"All participants in the program signed a conflict of interest statement that their purchase did not violate any ethics or conflict of interest policies of their company."
Wipro shares fell almost ten per cent in Mumbai on the news.
It added that revenue from World Bank projects was insignificant, and therefore the ban would not have an impact on future revenues.
But of course the ban will also have an impact on other customers considering their relationship with the company. The news is likely to increase pressure on an already beleagured sector suffering from the fallout from Satyam's implosion.
Wipro announces its third quarter results 21 January - numbers which are likely to get much closer attention than usual thanks to Satyam. In its second fiscal quarter ended 30 September 2008, Wipro grew revenues by 36 per cent to $1.138bn, with net income at $177m.
The bank said in future it will name all individuals and companies as soon as they are banned. ®