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ED confirms FERA violation probe into Wipro

Fakir Chand in Bangalore

The Enforcement Directorate or ED has confirmed that Wipro Limited, whose chairman Azim Hasham Premji is the richest Indian, was issued show-cause notices in 1990 for technical violation of the Foreign Exchange Regulations Act or FERA.

ED officials said the case petered as "Wipro has had the hearings in the case adjourned on some ground or the other".

It is learnt the company's counsel has agreed to appear before the adjudicated court at the hearing scheduled for next month.

The case involves an amount of over Rs 10 million over a few years. Certain goods imported by the company were apparently in contravention of the prescribed list. It is learnt the company considers this case as one related to 'technical aspects' of a law, and not as one of 'wilful wrong-doing'.

The Special Director of the ED from Delhi had handled the case. The ED officials had raided the offices of Wipro Infotech in 1990, and framed charges against the company and its top officials.

It is learnt cases of violations exceeding Rs 10 million were then handled by the special director. Lesser amounts were handled by the deputy director operating from zonal offices of the ED, like the one in Bangalore.

Charges were registered under Section 8(3), 8(4), and 16 (1) (C) of the Act on July 11, 1991.

Meanwhile, Wipro officials declined to comment on the case, saying their legal department will respond to it ''at an appropriate time''. Repeated attempts to contact Premji and top Wipro officials drew a blank.

The Bangalore office of the ED is said to have been contacted by the banking division of the Ministry of Finance, through its Delhi Directorate, to ascertain if any cases were pending against Premji. This was done as a routine name-clearing exercise, following a recommendation that Premji be nominated to the governing board of the Reserve Bank of India.

Although FERA is to be replaced by the Foreign Exchange Management Act, or FEMA, from May 1, ED officials clarified that a provision in FEMA facilitates the revenue department of the finance ministry to try FERA violation cases for another two years.

The case springs to light at a time when Premji and Wipro's board of directors are busy finalising the company's annual results to be declared on April 26.

In the New Economy-friendly market, the company's scrip has been heavily sought after by foreign and domestic institutional investors due to its illiquidity, with Premji holding 75 per cent of the total equity.

Market capitalisation of Premji's stake zoomed from Rs 218.06 billion on October 1, 1999, to a mind-boggling Rs 1.286 trillion by February 24, 2000. The Wipro scrip, with a face value of Rs 2, was quoting at Rs 9,600 levels in February.

However, since the Union Budget for the year 2000-01 was announced, Premji's market cap has taken a beating. The scrip closed at Rs 3,726 on the Bombay Stock Exchange on Tuesday.

Wipro Corporation comprises Wipro Limited, a publicly listed company, its subsidiary Wipro Net Limited, Wipro Finance Limited, and its interest in joint venture companies Wipro GE Medical Systems Limited. The other wholly owned subsidiaries of Wipro Limited are Wipro Prosper Limited and Wipro Trademarks Holding Limited. Wipro Corporation is a multi-business entity, with a presence in three businesses -- information technology (software services and systems and services), consumer care and lighting, and healthcare technology services.

ALSO SEE

The Textbook CEO: An interview with Azim Hasham Premji

Work harder, smarter, and India will offer whatever you want: Premji

Forbes names Wipro's Premji as richest Indian

Azim Hasham Premji on the Power of the Mind in the Infotech Era

Web site of Wipro Corporation

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