Indian outsourcer Wipro has confirmed that the company was barred from direct contracts from the World Bank, after family and friends of the bank's CIO and other senior executives purchased Wipro shares under a programme set up by the company.
Wipro, however, maintains that the number of shares offered by the company were too few to amount to an inducement. "It was a goodwill gesture," said Girish S. Paranjpe, joint CEO of Wipro's IT business.
The announcement by Wipro follows a statement on Sunday by the World Bank on its website, naming Wipro, Satyam Computer Services, and Megasoft Consultants as companies that have been barred from the bank's corporate procurement programme.
"This really doesn’t help restore confidence in Indian SI corporate governance, particularly in those companies where the founders have a controlling interest. Almost 80% of Wipro’s stock is controlled by founding Chairman, Azim Premji," said Anthony Miller of analyst UKHotviews .
Wipro said the World Bank had barred its software unit in June 2007 from participating in direct contracts from the lender between 2007 and 2011.
Wipro did not discuss the ban earlier as it was a World Bank policy not to discuss such investigations, said Paranjpe. Once the bank had changed its position, Wipro decided to issue a statement and clarify, he added.
The ban was prompted by the sale of about 1,750 shares for about US$72,000, Wipro said.
In connection with Wipro's initial public offering (IPO) of American Depository Shares (ADS) in the US, Wipro offered a "Directed Share Program" in 2000, targeted at customers, prospects, and employees, that allowed them to buy ADSs at the IPO market price.
The Directed Share Program is a commonly utilised programme that is also approved by the US Securities and Exchange Commission (SEC), Wipro said Monday. 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 said.
A number of persons from other client companies participated in the Directed Share Program, Paranjpe said. Only about two percent of the total ADSs were offered under this program, with a limited number sold to each person, he added.
Wipro said its business from the World Bank to date is insignificant.