| 'We followed the prevalent practice' | |
| Q&A: Girish Paranjape | | Bibhu Ranjan Mishra / Mumbai January 13, 2009, 0:45 IST | |
 The Indian software industry has been hit by one crisis after another. First, it was the Satyam shocker. Now comes the news that the World Bank has barred India’s third-largest software services exporter Wipro Technologies for four years. Even though the quantum of business to Wipro from the World Bank is minuscule, the fact that it has been banned by a globally-renowned institution is considered another significant blow to the Indian IT industry. In a discussion with Bibhu Ranjan Mishra, Wipro Technologies’ Jt CEO Girish Paranjape shares his views.
Could you please help us understand the rationale behind the disclosure of the World Bank, which has come in after two years?
They say this has resulted due to some changes in their internal policy. The incident goes back to 2000 when we did a listing in the US for our ADR. As per the US law at that time and as per the SEC approval scheme, we ran a programme called Directed Share Programme (DSP). It basically permitted us to issue shares at market price (which was about $41 at that point of time), to employees, customers and other stakeholders. It was limited to just 5 per cent of the total issue, and had a limitation about how many shares will be given to any single individual.
So you are saying this was a prevalent policy at that time...
Yes, it was a prevalent policy at that time, and about 93 per cent of the companies who did ADR during that period had a similar share purchase programme. So, we followed the prevalent practice. We offered it to our employees, clients and other stakeholders. Some people took it and some people did not take it.
They applied for the share and we handed over all the applications to our Investment Banker (Morgan Stanley), who had a policy as to how many shares they can allot based on the number of applications and the reservations. So, based on that they did the allotment — what we are not aware of.
When you offered the shares to the World Bank CIO, had he not taken the World Bank into confidence?
We don’t know who he (World Bank CIO) communicated to in the company internally. Normally, when we deal with a company, we don’t go to everybody in the company. We go to a senior person and hope that he/she is aware of what are the rules and regulations, followed in the company.
So he must be very much aware of the rules...
Yes, we have to assume that he knew what he is doing.
But why the issue is surfacing now?
We thought that it’s all over and done with. In any case, the involvement was relatively small. The aggregate number of shares purchased by them was 1,750, which was less than one per cent of our overall issue. In 2007, the World Bank did an investigation and they said the share should not have been offered to the bank’s employees even though we told them that this was offered to them as per the then rules.
It’s only when they signed a declaration that there won’t be any contradiction, the allotment would have happened by the Investment Bank. The World Bank said the employee had not taken internal permission and it’s improper. Based on that, they say they won’t allow us to do any work with the World Bank.
But, why is it that both the World Bank and Wipro kept silent for so long?
After the inspection in 2007, the World Bank had proposed us to keep it confidential, which we mutually agreed even though our Board was well aware of this in 2007 itself. However, recently they told us that they have changed the policy and want to disclose everything.
Don’t you think this is a breach of confidence?
But, this is between the two people. We did not have a legal binding agreement that we should not disclose. This was based on a general understanding.
Are you planning to take any action against them?
Why? This was an agreement in good faith. Because we thought we have closed the matter to the satisfaction of both the parties, and we thought there is no need to go for ...
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