World Bank bans Satyam for 8 yrs.

>> Wednesday, December 24, 2008

All bad news for Satyam at a single time.

In order to correct erroneous press reports, the Bank has confirmed that it declared Satyam ineligible to receive direct contracts from the World bank under its corporate procurement program for a period of eight years.

Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors. The Bank's decision was effective in September 2008 and followed a temporary suspension that took effect in February 2008.

There is no evidence that Satyam was involved in malicious attacks on the Bank's information systems.

When contacted, a Satyam spokeswoman said, "Satyam does not comment on individual clients."

Satyam started providing IT services to the World Bank in 2003. Two years later, allegations of bribery surfaced. In 2007, an internal World Bank investigation found that former VP Mohamed Muhsin had secured contracts and purchase orders worth $100 million for the Indian firm in return for Satyam's stock options

(ADRs) at preferential prices, as per earlier reports by Fox News. However, Satyam was allowed to work for the bank till 2008.

There have been other allegations against Satyam of causing security

breaches at the bank. World Bank's records, which contain sensitive financial information, have reportedly been illegally accessed over the last year.

Previous Fox News reports have accused Satyam of installing spyware on World Bank workstations that would have allowed access to sensitive financial information at the bank. During the meeting with GAP officials, Mr Van Pulley denied Satyam was behind any of the security breaches.

GAP international program director Beatrice Edwards, who met Mr Van Pulley, said Satyam's role in the breaches needs to be investigated. "If Satyam's contracts with the Bank were obtained based on considerations other than merit, and if it submitted invoices for which there was no documentation, then Satyam may be responsible for the security breaches because it did not do work it should have done. Or the work it performed was not done competently," she said, in an e-mail statement.

Satyam has been in the line of fire since its botched attempt to acquire two realty and infrastructure firms for $1.6 billion that are partially owned by the promoter family. It has also been involved in a legal battle with mobile and online payments firm Upaid Systems that has sued Satyam for fraud, forgery and breach of contract. - ET