Indian outsourcer Wipro said Monday 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 program 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 web site, naming Wipro, Satyam Computer Services, and Megasoft Consultants as companies that have been barred from the bank's corporate procurement program.
The World Bank determined in June, 2007, that Wipro was ineligible for direct contracts from 2007 to 2011, Wipro said.
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 U.S., 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 utilized program that is also approved by the U.S. 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 2 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.