Wipro Barred From World Bank Contracts, Shares Slide

Jan. 12 -- Wipro Ltd., India’s third-largest software exporter, and Megasoft Consultants Ltd. are barred from working for the World Bank, the institution said, less than three weeks after it disclosed Satyam Computer Services Ltd. was banned.

Wipro fell as much as 12 percent in Mumbai, the biggest decline in almost three months. Megasoft Ltd., parent of the consultant unit business, slumped 15 percent. Bangalore-based Wipro said it was banned in 2007 for offering World Bank employees shares in its stock offer in the U.S. in 2000.

Wipro’s disclosure, more than 18 months after the penalty was imposed, came after the World Bank decided to publish names of all companies that it barred from contracts. Satyam’s founder was arrested last weekend after admitting fraud in a scandal that has roiled equity markets and spurred tighter disclosure rules.

“In this environment, companies will make disclosures just to be sure they aren’t perceived to be lacking in transparency,” said Sandip Sabharwal, chief investment officer at Mumbai-based J.M. Financial Mutual Fund, which manages assets worth $1.2 billion in equities and bonds. “We need to look at the details before making an assessment.”

Wipro is barred from World Bank contracts from June 2007 for four years, according to a statement on its Web site. The purchase didn’t violate any ethics or conflict of interest policies, Wipro said in an e-mailed statement.

Revenue from the World Bank is “insignificant,” the company said, adding it did not anticipate the ban affecting other contracts.


“In light of the current developments, we decided it was better to disclose more rather than less,” Wipro Chief Financial Officer Suresh Senapaty said in a telephone interview. Wipro has offered stock to customers and employees of customers other than the World Bank, Senapaty said.

World Bank employees, their family and friends bought 1,750 Wipro shares for about $72,000 at the IPO price, Wipro 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,” according to today’s statement.

Megasoft Consultants was banned in December 2007 for four years, the institution said in the statement on its Web site. The Indian computer services provider participated in a joint venture with World Bank employees while also working with the institution, it said.

The World Bank in December announced it had barred Hyderabad-based Satyam for eight years from September, following a temporary ban imposed in February. Satyam’s founder was arrested over the weekend in an unrelated fraud investigation and the government sacked its board and took over running of India’s fourth-largest software exporter.

“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,” the lender said in the statement. “This change was made in the interest of fairness and transparency.”