In 2000, IT services firm Wipro Technologies gave senior IT staffers at The World Bank Group a chance to buy stock in parent company Wipro Ltd. under a family-and-friends program, as part of an IPO in the U.S. Bank employees bought about 1,750 shares, paying a total of $72,000.
Nine years later, on Jan. 11, the Washington-based World Bank disclosed that Wipro is on a blacklist of companies barred from receiving new contracts. The financial institution said it imposed the four-year ban on the company in June 2007 for "providing improper benefits to bank staff."
The Wipro disclosure followed an announcement last month that the World Bank had put another India-based outsourcer, Satyam Computer Services Ltd., on its vendor blacklist in September. Satyam, which has since been hit by an accounting scandal, has been banned for eight years, for the same reason as Wipro and for not being able to document fees charged by subcontractors.
A World Bank spokesman said last week that the bank publicly announced the Satyam ban after seeing remarks by a company official denying that the outsourcer was on the blacklist.
The bank subsequently decided to identify all of the companies on the list "in the interest of fairness and transparency," according to the Jan. 11 announcement.
Wipro defended the stock-purchase offer to World Bank employees. Girish S. Paranjpe, one of the two joint CEOs of Wipro Technologies, described the offer as "a goodwill gesture."
Peter Brudenall, an attorney at Hunton & Williams LLP in London, said the cases of Satyam and Wipro are likely isolated examples, not an indication that there's something fundamentally wrong with India's outsourcing industry. But, he added, the Indian government should require companies to provide more transparent views into their financial records.
This version of the story originally appeared in Computerworld's US print edition.