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Why WIPRO was banned from World Bank business: A FAQ

January 13, 2009
FAQs on the Directed Share Program & World Bank: A Wipro Press Release

Wipro-Technologies_0

1. Why is Wipro ineligible to contest for WB contracts?
Answer: In June 2007, after its internal investigation, the WB concluded that in October
2000, Wipro provided unapproved benefits to some of its employees. According to WB, this was in violation of their policy.

2. Why did the WB determine that unapproved benefits were provided to its staff?
Answer: In October 2000, in connection with its Initial Public Offering (IPO) of American Depository Shares (ADS) in the United States, Wipro offered a commonly utilized and SEC approved DSP that allowed employees and clients to purchase ADSs at the IPO price. The Program’s objective was to involve employees and customers with the public offering to expand our recognition and brand. No more than 2000 shares were offered to any single participant. A majority of the shares sold under the DSP were allotted to our employees.The balance of the shares was sold to clients and prospective clients. Pursuant to this program, Wipro representatives offered the WB, through its Chief Information Officer (CIO), participation in the program and the CIO directed this offer to members of his family and friends. The aggregate number of shares purchased by them was 1,750 for approximately $72,000 at the IPO price. As a requirement to participate in the program, purchasers were required to provide a representation that no conflict of interest existed and that their purchase did not violate any ethics or conflict of interest policies of their company.

3. What is a DSP?
Answer: DSP is a SEC approved program that accompanies Initial Public Offering (IPO) of shares in the US that allows employees, customers, friends and other individuals on a selected basis to participate in the IPO by purchasing relatively small amounts of shares at the IPO price. At that time, DSPs were an overwhelmingly common device to provide shares to such persons. The Program’s objective was to involve employees and customers with the public offering to expand our recognition and brand. We issued 3.1625 m shares at $41.375 as part of ADR aggregating $131 million. The total shares sold under the DSP were less than 2% of the total ADS offering.
4. How many shares were given and at what price?
Answer: An aggregate of 1750 ADS were sold to a total of 3 individuals that were either
employees, or relatives or friends of WB employees. The ADSs were sold at the IPO price of
$41.375 per share for a total consideration of $72,000.
5. When did the relevant events occur?
Answer: The DSP offers were made between September and October of 2000. The WB
determination of ineligibility was in June 2007.
6. Why Wipro is disclosing this information now after more than one and a half years?
Answer: Wipro has always maintained the highest standards of corporate governance and disclosure. In the interest of continuing our practice of sharing relevant information on a timely basis, we have decided to voluntarily disclose information. In connection with the WB’s revision of its disclosure policy, we have also decided to voluntarily disclose this information.
7. Why has the ineligibility happened in 2007 for ADR issue in 2000?
Answer: We are not privy to WB’s reasons why the decision was made in 2007 for events which occurred in 2000. WB conducted an internal investigation in first half of 2007 and notified us of such investigation by requesting our cooperation and participation. We did so and WB made its conclusion in June 2007.
8. Has Wipro’s Board been informed about the same? When were they informed?
Answer: Yes. Wipro’s Board of Directors was informed at the July 2007 Board meeting immediately after we received the communication from the WB.

9. What is the past and current business of Wipro with WB?
Answer: Wipro’s business with WB has been insignificant. Currently, WB is not an active customer of Wipro.
We believe the revenue from WB contracts has not been significant and therefore our ineligibility to participate in WB contracts will not adversely affect our business.

10. How is this different from intimation of WB regarding Satyam’s debarment by WB?
Answer: Our knowledge of Satyam is limited to what is available in the public domain. We cannot comment on that.

11. How long is Wipro ineligible for WB contracts?
Answer: Wipro is ineligible to bid for WB projects for four years till June 1, 2011.

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3 Comments leave one →
  1. shishir1010 permalink
    January 14, 2009 12:20 am

    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

  2. January 14, 2009 9:48 am

    so…what does this say? I think Wipro should sue World Bank for spoiling their image…

    • January 14, 2009 12:55 pm

      Umm.. I dont think it will do any good to WIP.
      Dont worry no major harm done. They just[just?] offerred shares to WB employees

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