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December 29, 2008

World Bank imposes eight-year ban on business dealings with Satyam

The World Bank has decided not to carry out any business with Indian IT firm Satyam Computer Services for the next eight years, citing allegations of data theft, bribing its staff for contracts and not providing documentation on invoices.

By CBR Staff Writer

The Indian company is now ineligible to receive any contracts from the World Bank, effective September 2008. The bank had temporarily suspended its business with the company in February 2008.

This comes at a time when the company is under scrutiny for its $1.6 billion deal with two promoter-related companies, Maytas Infrastructure and Maytas Properties. The deal was put off following shareholder intervention.

TR Prasad, independent director on the Satyam board, said: The World Bank had never complained or informed us. Satyam’s contract with the World Bank had come up for discussions in an earlier board meeting. We were told that as a matter of policy, the World Bank does not renew contracts with the same vendor for more than five years.

Meanwhile, Satyam has formally requested the World Bank to withdraw inappropriate statements about the company and to issue an apology for the harm done to the company. It also demanded a full explanation of the circumstances related to the bank’s “inappropriate statements”.

Satyam further advised the bank that it would evaluate all possible options in view of both the bank’s inappropriate public statements and its response to Satyam’s requests. 


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