The World Bank has barred India’s Satyam Computer from doing business with it for eight years on the charges of data theft, a Bank official said on Tuesday.
“The information is true… quotes about the World Bank on Fox News channel are correct,” the Bank’s spokesperson in India said when asked about the US media reports on the debarment.
The development comes at a time when the company is facing a probe back home over an abortive acquisition deal involving two firms promoted by Satyam Chairman Ramalinga Raju’s family.
The World Bank debarment — the harshest sanction the world’s largest anti-poverty agency has imposed on any company since 2004 — was meted out for “improper benefits to bank staff” and “lack of documentation on invoices,” said a Fox News report, quoting Robert Van Pulley, the top World Bank information security official.
Satyam had announced a USD 1.6 billion deal to acquire two firms — Maytas Infra and Maytas Properties — promoted by Raju’s family and withdrew it within hours after shareholders’ dissent.
This was followed by market regulator Securities and Exchange Board of India and the government saying that it would look into the matter. Months after “stonewalling and denying” reports that Satyam has been barred from doing any business with the bank
for eight years, a top World Bank official has admitted that Satyam — one of its technology vendors — was barred in February and the ban has already started in September, the Fox News report said.
The report added that Van Pulley made the comments about Satyam debarment in a meeting and two telephone conversations with officials of the Government Accountability Project (GAP), a 30-year-old whistle-blowing organisation based in
Washington.
In a conversation with GAP, Van Pulley also admitted that the Satyam case had been turned over to the US justice department in 2006 as well as to the US treasury dept, the
report added.
“It is not known if a case against Satyam or World Bank officials is being pursued by either government agency,” it said, adding that Van Pulley is also in charge of the bank’s
procurement department, where he oversaw the Satyam contract.
“From 2003 through 2008… the World Bank paid Satyam hundreds of millions of dollars to write and maintain all the software used by the bank throughout its global information network, including its back-office operations. That involved overseeing data that ranges from accounting and personnel records to trust funds administered for many of the world’s richest nations.
“But at the same time, Satyam was straying badly across the bank’s ethical warning lines. In 2005, the bank’s chief information officer, Mohamed Muhsin, was ousted after being accused of improperly buying preferential stock options from Satyam, even as he awarded the firm major contracts.
A top-secret investigation led to Muhsin being banned permanently from the bank in January 2007. But for reasons that remain unclear, Satyam was allowed to remain in control of the bank’s information network until early October 2008,” the report added.
Fox News further quoted securities lawyers as saying that “the debarment by the World Bank, one of Satyam’s largest and most important customers, should have been announced by the company to its shareholders immediately and also filed with the US Securities and Exchange Commission.”
Quoting sources, the report said that one of the worst breaches apparently occurred last April in the network of the bank’s super-sensitive treasury unit, which manages 70 billion dollars in assets for 25 clients including the central banks of some countries.
“…bank investigators had discovered that spy software had been covertly installed on workstations inside the bank’s Washington headquarters allegedly by one or more contractors from Satyam,” Fox News said.
According to the report, Zoellick reportedly told his deputies, “I want them off the premises now”. But at the urging of the bank’s then-chief information officer, Satyam employees remained at the bank through early October while it engaged in a “knowledge transfer” with two new contractors, it noted.
The report pointed out that in discussions with GAP’s officials Thursday, Van Pulley denied that Satyam was behind any of the bank’s security breaches.
“I am not in a position to tell you,” adding that “we’re confident” it wasn’t Satyam, the report said quoting Van Pulley.
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