India’s third largest IT services export company, Wipro will pay a civil penalty of $5 million to settle a six-year-old internal financial fraud case in a settlement with the US Securities and Exchange Commission (SEC). In a filing to the stock exchanges, Wipro said, “In agreeing to the settlement, the company neither admits nor denies the SEC’s allegations that the company violated certain provisions of the securities and Exchange Act of 1934. The SEC has credited the company’s cooperation and remedial measures in arriving at the settlement.”
The case relates to an embezzlement by a Wipro employee to tune of $4 million (R22.8 crore approximately) which was self discovered by the company in December 2009 which had started in November 2006.
According to Wipro, it was able to substantially recover the embezzled funds and it publicly disclosed this matter in FY10.
Wipro said, upon the discovery of the embezzlement, the company immediately took several steps which included an internal and external investigation, hiring additional accounting and finance personnel and adopting the recommendations of auditors and consultants.
“The company identified the underlying internal control weaknesses and these were remediated as of March 31, 2010,” it said. The SEC initiated an inquiry in September 2010.
Wipro said that the settled resolution of this long pending matter to be an efficient approach and in the best interests of the company and its investors to avoid the cost associated with a prolonged litigation.“Wipro takes pride in its commitment to the highest standards of integrity and corporate governance. The company is pleased to formally resolve and put this six-year-old matter behind it,” it said.
Reacting to these developments, the Wipro scrip closed at R458.95 recording a dip of 0.52% on BSE on Friday.