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Sambhar Mafia - Cooked To Kill!

Friday, January 23, 2009

Corporate Reputation Management In Focus

Rumours about accounting fraud at Educomp have prompted the company to use Google contextual ads to direct people to their company website and giving their version of the story. The ad states that a "Point-by-Point rebuttal on allegations" is available at their corporate website.

I'm not sure why Wipro and ICICI didn't use such a medium when their companies were facing negative publicity. Most of them continue to use full page newspaper ads to dispel rumours.

IT major Wipro was in the news when it emerged that World Bank had banned them for alloting shares to some World Bank employees. If Wipro made no mistake, then why didn't they disclose the ban and defend their move when they received the ban notification from World Bank. If they had done so, they need not have embarked on the firefighting exercise to explain their stand.

And, both hid the fact that all this had happened till the Bank chose to reveal it. If they had nothing to hide, and felt they were being wronged, why didn’t they make an issue of it? This is the question any normal being will have on reading about it all, and the fact is that all the immense wordage put out by the two firms, including a lofty internal mail to his lakh-odd employees by Wipro’s legendary chairman, Azim Premji, doesn’t address this crucial point. (Link)

Business Journalist Govindraj Ethiraj explains this issue in more detail in this Business Standard article:

So what was Wipro doling out, bribe or speed money? I would assume that like any restricted offering, which is what a Directed Share Programme ought to be, the upside was in the fact that some people could get hold of the shares as against others who did not. The price is incidental. Somewhat like getting a well-priced IPO stock in India in the primary market, with the expectation it will zoom on listing or thereabouts.

So maybe it was closer to speed money. Handing out a favourable allotment in a share offer because a good relationship will help the company in the long term. And what better way to do it than to make your customers a part of the shareholder family? Except that World Bank employees are not customers — the Bank is and it’s what I would call a governmental organisation. Nor are they the equivalent of customs officials who can hold up cargo. But then that’s the point, the fine line only gets finer. (Link)

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