The World Bank has issued a ban on 111 firms and individuals, with several of these bans being permanent and non-revocable.
These 111 firms and individuals from around the globe including the EU and the US and have been blacklisted as suppliers or vendors for any World Bank funded project.
In contrast Satyam, Wipro and Megasoft had been barred for a limited period for supply of products and services to World Bank directly for one reason of the other.
While Satyam was a major IT services supplier to the World Bank and even operated a call centre in Chennai for the multilateral agency, besides setting up its intranet and undertaking several other projects, Wipro and Megasoft had a much smaller quantum of business - in fact Megasoft had not handled any World Bank work after 2004 - and therefore being debarred by it has hardly impacted them financially. Moreover, the actual debarment took place in 2007, while the ank has opted to publicise it only now.
Therefore, it seems the World Bank statement about Wipro and Magnasoft Consultant being debarred from its list of vendors appears to have been blown out of proportion and context, coming as it does in the wake of Satyam's debarment (See: Satyam barred from World Bank work for 8 years) and the subsequent disclosures by it spromoter of its books having ben fudged (See: Satyam's Raju admits to fraud and resigns)
The fear that has been embedded in the minds of the Indian investor with regard to fraudulent happening in Satyam resulted in a kneejerk reaction to the World Bank statements and a sharp fall in the price of Wipro.
The World Bank representative in India Sudip Mozumder, told domain-b , ''A good part of the software requirement is fulfilled by Indian companies as India is the power centre for IT.''
Mozumder added, ''The debarment of the other 111 firms has a wider financial impact on them than the ban on these three software firms.''
Underlying its confidence in Indian IT companies, the World Bank is reported to have hired Indian IT major Tata Consultancy Services to do much of the work previously handled by Satyam.
The market seems to realise this and the shares of Wipro rose this morning by 2.32 per cent.
In a statement, Wipro Limited said that in connection with revised disclosure policies, Wipro and the World Bank are disclosing that in June 2007 the World Bank determined Wipro to be ineligible to contest for direct contracts from the World Bank for the period 2007 - 2011.
In 2000, in connection with its Initial Public Offering (IPO) of American Depository Shares (ADS) in the United States, Wipro offered a commonly utilised and SEC-approved directed share programme (DSP) that allowed its stakeholders like employees and even clients to purchase ADSs at the IPO market price.
The programme's objective was to involve employees and customers with the public offering to expand Wipro's recognition and brand value.
A majority of the shares sold under the DSP were allotted to Wipro employees. Wipro also offered the World Bank, through its Chief Information Officer (CIO), and a senior staff, who directed this offer to members of their family and friends, who purchased about 1,750 ADss for approximately $72,000 at the IPO price.
All of them had signed a conflict of interest statement, stating that their purchase did not violate any ethics or conflict of interest policies of their employer.
Wipro says till date its revenue from the World Bank is insignificant and its inability to get future business from the bank "will not adversely affect our business and results of operations."