Wipro, Megasoft implicated in World Bank procurement scandal

The Bank has released a statement in which it said Wipro and Megasoft have each been banned for four years.

Both will be able to recontest Bank deals in 2011, the institution said.

A Wipro spokesperson was dismissive of the impact of its ban.

“To date, Wipro’s revenue from World Bank is insignificant,” the spokesperson said.

“Our inability to get future business from World Bank will not adversely affect our business and results of operations.”

Wipro said the ban stemmed from a share offering to World Bank employees in 2000 including the Bank’s CIO and unnamed senior staff.

The aggregate number of shares purchased by them and their immediate families was 1,750 for approximately US$72,000 at the IPO price, Wipro said.

“All 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,” the Wipro spokesperson said.

The ban will also have ‘no material affect’ on Megasoft, according to a statement by its chief executive GV Kumar.

“Megasoft has had no business from World Bank since 2004 and hence there is no financial impact on the company due to this announcement,” said Kumar.

He also appeared dismissive of World Bank’s reasons for barring the firm from future procurement.

“The World Bank approached us in 2007 seeking details about Megasoft China Operations and we gave them all the details,” said Kumar.

“We had by then even shut down our China operations.

“They objected to us having a joint venture with an ex-employee of the World Bank and chose to de-bar us on that ground [sic].

“Megasoft has always maintained high levels of corporate governance and have made disclosures about all our operations including about Megasoft China,” said Kumar.

Corporate governance is back on the agenda after Satyam’s US$1 billion fraud was revealed last week and news of its eight-year ban by World Bank was reported in late December.

Many observers are predicting a revamp of corporate governance frameworks in the wake of the Satyam scandal.