The grim environment in the IT industry turned grimmer on Monday with Wipro Technologies disclosing that in June 2007, the World Bank had banned it from bidding for its contracts till 2011 because the company had offered shares to the bank’s employees during its US IPO in 2000 which the bank termed “improper benefits”.
Impact of news
The disclosure, which pushed the Wipro stock down by nearly 10% on the Bombay Stock Exchange, came after the World Bank decided to publish names of all companies that it had barred from contracts.
The bank has also barred Hyderabad-based Megasoft Consultants for a period of four years on the grounds that it “participated in a joint venture with bank staff while conducting business with the bank”.
Wipro’s clarification
Wipro said the offer of shares to employees and clients, including World Bank employees, was part of the directed share program (DSP) approved by US stock market regulator SEC. The DSP has the objective of involving employees and customers with the public offering to expand Wipro’s recognition and brand, the company said.
“All participants in the program including the World Bank CIO and another employee who took shares in the names of their wives, signed a statement that their purchase did not violate any ethics or conflict of interest policies of their company, Senapathy said. He said the shares offered were at market price, not discounted, and that some customers had declined the offer because it con flicted with their company’s policies
Inadequate Disclosure
Wipro stock plummets by 12% in early trade and ends the day losing 9.3% of its value at Rs 227.35
In the process Azim Premji, promoter of the company, loses Rs 2,705 crore in one day Premji holds 79.37% stake in the company as per data on BSE website
Source: TimesofIndia
January 13, 2009 at 7:03 pm |
Whatever both parties would say its a loss to Wipro’s image.
I have expressed my views on http://controversial-affairs.blogspot.com/2009/01/world-bank-who-cares.html