FAQs on the Directed Share Program & World Bank In response to a recent note issued by the World Bank stating that Wipro is debarred from getting direct contracts from the World Bank for the period 2007 – 2011, Wipro categorically reiterates its position: * Wipro did no wrong. Wipro issued shares at IPO market price under a commonly utilized and Securities Exchange Commission (SEC) approved Directed Share Program (DSP) to customers and employees at the time of its ADR IPO in 2000
* All recipients were formally required to sign a statement that their purchase did not violate any ethics or conflict of interest policies of their company.
I hope the following FAQ clears the air. Why is Wipro ineligible to contest for WB contracts?
In June 2007, after its internal investigation, the WB concluded that in October 2000, Wipro provided unapproved benefits to some of its employees. According to WB, this was in violation of their policy. Why did the WB determine that unapproved benefits were provided to its staff?
In October 2000, in connection with its Initial Public Offering (IPO) of American Depository Shares (ADS) in the United States, Wipro offered a commonly utilized and SEC approved DSP that allowed employees and clients to purchase ADSs at the IPO price. The Program’s objective was to involve employees and customers with the public offering to expand our recognition and brand. No more than 2000 shares were offered to any single participant. A majority of the shares sold under the DSP were allotted to Wipro employees. The balance of the shares was sold to clients and prospective clients. Pursuant to this program, Wipro representatives offered the WB, through its Chief Information Officer (CIO), participation in the program and the CIO directed this offer to members of his family and friends. The aggregate number of shares purchased by them was 1,750 for approximately $72,000 at the IPO price. As a requirement to participate in the program, purchasers were required to provide a representation that no conflict of interest existed and that their purchase did not violate any ethics or conflict of interest policies of their company. What is a DSP?
DSP is a SEC approved program that accompanies Initial Public Offering (IPO) of shares in the US that allows employees, customers, friends and other individuals on a selected basis to participate in the IPO by purchasing relatively small amounts of shares at the IPO price. At that time, DSPs were an overwhelmingly common device to provide shares to such persons. The Program’s objective was to involve employees and customers with the public offering to expand Wipro's recognition and brand. Wipro issued 3.1625 m shares at $41.375 as part of ADR aggregating $131 million. The total shares sold under the DSP were less than 2% of the total ADS offering. How many shares were given and at what price?
An aggregate of 1750 ADS were sold to a total of 3 individuals that were either employees, or relatives or friends of WB employees. The ADSs were sold at the IPO price of $41.375 per share for a total consideration of $72,000. When did the relevant events occur?
The DSP offers were made between September and October of 2000. The WB determination of ineligibility was in June 2007. Why Wipro is disclosing this information now after more than one and a half years?
Wipro has always maintained the highest standards of corporate governance and disclosure. In the interest of continuing Wipro's practice of sharing relevant information on a timely basis, Wipro have decided to voluntarily disclose information. In connection with the WB’s revision of its disclosure policy, Wipro have also decided to voluntarily disclose this information. Why has the ineligibility happened in 2007 for ADR issue in 2000?
Wipro is not privy to WB’s reasons why the decision was made in 2007 for events which occurred in 2000. WB conducted an internal investigation in first half of 2007 and notified Wipro of such investigation by requesting Wipro's cooperation and participation. Wipro did so and WB made its conclusion in June 2007. Has Wipro’s Board been informed about the same? When were they informed?
Yes. Wipro’s Board of Directors was informed at the July 2007 Board meeting immediately after Wipro received the communication from the WB. What is the past and current business of Wipro with WB?
Wipro’s business with WB has been insignificant. Currently, WB is not an active customer of Wipro. Wipro believe the revenue from WB contracts has not been significant and therefore Wipro's ineligibility to participate in WB contracts will not adversely affect Wipro business. How is this different from intimation of WB regarding Satyam’s debarment by WB?
Wipro's knowledge of Satyam is limited to what is available in the public domain. Wipro cannot comment on that. How long is Wipro ineligible for WB contracts?
Wipro is ineligible to bid for WB projects for four years till June 1, 2011.
Last edited by Digital Vampire : 13th January 2009 at 12:27.
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