Wipro employees behind Citibank's $900 million blunder

Global banking giant Citibank has a protocol of a so-called “six eyes" for high-value transactions. It means at least three people must approve large sums of money transfers.

On August 11, 2020, Citi was set to transfer 8 million dollars to lenders of cosmetics company Revlon in its capacity as a loan agent. The ‘six eyes’ was at hand to make sure everything went without a hitch. Of the three, two were working with Wipro Technologies, the Indian technology partner of Citi and the third person was a senior Citi manager- mistakenly paid Revlon’s lenders around $900 million.

The incident-billed as the biggest blunder in banking history. It was back in the news earlier this month when Citigroup lost a legal battle in the US to recover the money it accidentally transferred. It is bad optics for Wipro.

It is calculated as the human errors ,which are common. Citi is one of the top clients of Wipro and accounting for over $250 million annually. The company provides Citi a range of services including IT, infrastructure management and business processing services (BPS).

Siddharth Pai, an industry veteran who has advised software firms on deals worth billions of dollars, said the software vendor usually has sufficient insurance for events like these but the general liability is limited to the value of the contract. “If the judgement is not in favour of Citi, both Citi and Wipro will have to come together and discuss how to cover the uninsured liabilities. This event will set a precedent for how much liability rests with the outsourcing firm. It will be an acid test on how much responsibility an outsourcer is willing to take.”

Citibank will decide on its arrangement with Wipro only after the US court cases are settled, according to people familiar with the matter. If Citi were to seek a penalty or take Wipro to court, its US case could weaken, said one of the persons, asking not to be named.

“The maker and checker are responsible for the transactions but the ultimate responsibility is with the approver," said Naresh Malhotra, a senior banking consultant.  Indian banks also follow the multi-party authorisation model for high value-transactions, he said.