'Better corporate governance needed'

The recent case of embezzlement by a Wipro insider, believe industry experts and analysts, would have little impact on the company's business or image. However, they simultaneously caution that the issue yet again highlights the need for better measures on corporate governance and fraud.

The Wipro staffer (who reportedly committed suicide later) from the company's corporate accounts division stole $4 million (Rs 18 crore) from the company's bank account by accessing a colleague's password.

Research firm Forrester says some of Wipro's clients have expressed concern over such an incident going unnoticed for a long period, especially as Wipro has consistently touted its process integrity, as well as the ethics and value system of its employees.

"However, we don't believe this incident will impact Wipro or its clients in any way. But, at some level, it's a gentle reminder of the importance of IT (information technology) security and that evaluating your vendor's security standards is a must. Against the backdrop of the Satyam saga, we find many stories - some true and some exaggerated - making rounds. But, this incident is quite different than earlier instances," says Sudin Apte, Principal Analyst at Forrester Research.

"Such a fraud can happen in any business in any part of the world. It raises concern about corporate governance and controllership, but is insignificant to impact clients' perception about the company," concurs Sabyasachi Satpathy, Managing Director of Tholons.

India, according to a KPMG survey, is perceived as a fraud haven, with over 75 per cent of respondents to the survey saying their highest concern was fraud remaining undetected, followed by inadequacy of anti-fraud measures and unethical behaviour of employees.

While it took a Satyam incident for the country to sit up and look at the problem, the KPMG survey had said that over 80 per cent of the respondents accepted fraud was a problem in the corporate environment in India. And, that another 70 per cent believed fraud in India would increase over the next two years.

Analysts also noted that since the Indian IT industry is focused on external markets and interacts on a large scale with the Western world, any small incident grabs attention. Besides, companies like Wipro are listed overseas, too, as with the New York Stock Exchange.

It was a little over a year ago when the World Bank decided to blacklist Wipro Technologies from participating in any of the bank's future contracts, when an incident pertaining to Wipro's selling shares of the company to some WB officials in 2007 came to light. The KPMG survey said supplier kickbacks were the most prevalent type of fraud faced by organisations.

The KPMG study noted that companies refrain from taking legal action against fraud perpetrators and prefer separating the perpetrator of fraud from the company or stop dealing with them (external parties). The same was the case with Wipro, which preferred to settle the issue outside the courts.

"I think corporate fraud has been happening in India. It's just that in recent years, such incidents have started to come to light due to certain incidents that have happened in India. The other problem is the rigour of the law. In the US, the course of action taken by the law is much faster," says Abhay Gupte, Senior Director, Deloitte.