Investigation prompts Wipro to defer SEC filing

IT-to-soaps major Wipro has announced that the company will be late in filing its annual report (on Form 20-F), pending the completion of the investigation in the alleged embezzlement of funds by one of its employees. This had come to light in early February this year. The company, in a filing to the US Securities and Exchange Commission (SEC), said it was expecting to file its annual report by November 10, against the due date of September 30, once the audit committee completed the investigation.

The incident of the embezzlement of about $4 million (Rs 20 crore) by an employee working in the controllership division within the finance department of Wipro came to light in February this year. The employee, Anup Kumar Agarwal, had allegedly managed to transfer the money from Wipro’s corporate account to his and his family members’ accounts by stealing the official net banking password from another Wipro employee. When the company came to know about the incident on December 13, 2009, it managed to substantially recover all of the embezzled amount before Agarwal decided to end his life on December 24, 2009.

“In December 2009, we noticed embezzlement by one of our employees. Pursuant to an investigation that is on, steps are being taken by the company to address the processes and people issues,” Wipro CFO Suresh Senapaty had said in a statement at that time.

In its filing to SEC on Friday, the company said, after the fraud came to light, Wipro, with its audit committee, conducted an investigation to determine, among other things, the materiality of the amount embezzled and to assess the design and implementation of internal control processes.

The company sources said while the internal investigation was complete, the audit committee had appointed a US-based Law firm, K&L Gates, as independent counsel to evaluate certain issues like the “appropriateness of certain accounting entries”, which came to the surface during the investigation.

The company expects the investigation by the external independent counsel to complete before November 10.

Wipro has filed its financial statements in IFRS, pursuant to the laws of India, for the year ended March 31, and the quarter ended June 30.