Ban on Satyam continues, says World Bank

Ban on Satyam continues, says World Bank
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First Published: Fri, Sep 18 2009. 11 07 PM IST

Firm stand: The World Bank Group building in Washington. The lending agency has banned fraud-hit Satyam Computer for eight years. Joshua Roberts / Bloomberg.
Firm stand: The World Bank Group building in Washington. The lending agency has banned fraud-hit Satyam Computer for eight years. Joshua Roberts / Bloomberg.
Updated: Fri, Sep 18 2009. 11 07 PM IST
Mumbai: The World Bank denied on Friday a claim by software services provider Mahindra Satyam that it was in talks with the Washington, DC-based lending agency to revoke an eight-year ban imposed on Satyam Computer Services Ltd, acquired and renamed by Tech Mahindra Ltd this year.
Firm stand: The World Bank Group building in Washington. The lending agency has banned fraud-hit Satyam Computer for eight years. Joshua Roberts / Bloomberg.
“World Bank is not in talks or negotiations with Tech Mahindra over its eight-year ban of Satyam,” said Carl Hanton, a spokesperson for the World Bank, in response to an email sent by Mint to the agency’s chief information officer Shelley B. Leibowitz.
“The bank sees no justification or new evidence to warrant an early review of its decision last year to ban Satyam for providing improper benefits to bank staff and failing to maintain documentation to support fees charged for its subcontract,” Hanton added.
Mahindra Satyam was the new entity created after fraud-hit Satyam was acquired in an April auction by the information technology arm of auto maker Mahindra and Mahindra Ltd. Hyderabad-based Satyam became the target of India’s biggest fraud investigation after founder B. Ramalinga Raju in January confessed to having fudged its accounts to the tune of at least Rs7,136 crore over several years.
On Tuesday, news agency PTI quoted Mahindra Satyam’s European head Atul Kanwar as saying the company was seeking an end to the World Bank ban. “We are having discussions with the bank. We have made some progress on that front,” he was quoted as saying.
The World Bank ban on Satyam was imposed in September last year and news of it was broken the following month by Fox News. The company denied the reports, but declined to explain, citing client confidentiality agreements.
In January, the bank released a statement confirming the ban. “Satyam’s senior executives were openly denying reports of World Bank debarring the firm from doing any work for the bank. That forced the bank to make a public announcement and set the record straight.”
“The eight-year ban remains in effect,” Hanton wrote in the latest email.
“Discussions are on at multiple levels,” insisted a Mahindra Satyam spokesperson late on Friday.
The World Bank in January also disclosed that apart from Satyam Computer, it had barred Wipro Ltd and Megasoft Ltd from doing any work for it for “providing improper benefits to bank staff” in the first instance, and “participating in a joint venture with bank staff while also conducting business with the bank” in the second.
Since Tech Mahindra took over management control of Satyam, it has been trying to rebuild the brand to win back clients who deserted the company after the accounting fraud came to light.
Reuters news service also reported on 15 September, quoting Kanwar, that the software services firm had won 32 new clients since May and that some large clients were beginning to return. He said the company has 420 clients against 480 in January just before Raju’s confession, it said.
Raju, his brother and Satyam’s former managing director B. Rama Raju, and former chief financial officer Srinivas Vadlamani have been arrested and remain in custody as investigations and legal proceedings into the fraud by various agencies continue.
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First Published: Fri, Sep 18 2009. 11 07 PM IST