Wipro Ltd., India’s third-largest software exporter, said it was barred from bidding for contracts from the World Bank until 2011 after it offered employees of the institution shares in its initial public offering.Shares went down 10%. It's all sentiment. And it won't hit just stock prices. Imagine the Wipro exec meeting a client today.Wipro fell as much as 12 percent in Mumbai.
The purchase didn’t violate any ethics or conflict of interest policies, Wipro said in an e-mailed statement today. Wipro’s business with the World Bank is minimal, the Bangalore- based company said. The ban took effect in 2007, it 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.
World Bank employees, their family and friends bought 1,750 Wipro shares for about $72,000 at the IPO price, Wipro said.
"Wipro’s revenue from the World Bank is insignificant," the company said in the statement. "Our inability to get future business from World Bank will not adversely affect our business and results of operations."
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>I am not sure if you know this, but its a common practice among most Indian consulting companies through in “kickbacks” for people who divert contracts and such. For ex. you see Professor Palepu getting 79L as “professional fees”. I heard that such kickbacks are actually built into their cost model!! Its hard to imagine such a widespread practice in US (of course in public ocmpanies)
01.13.09 at 5:27 AM