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Bribery allegations hit India Walmart
November 24, 2012 , 3 : 00 am
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Walmart and Bharti Enterprises ‘have suspended a few associates’ ,the company paid bribes to promote its Indian business. Walmart earlier this month said it had widened an international bribery probe. – Bloomberg News
Walmart's Indian unit said yesterday it had suspended several executives as part of an investigation into bribery allegations, with a report saying its finance chief was among those told to stay at home. The United States group, which has a partnership in India with Bharti Enterprises, has set up 20 'Best Price' wholesale stores in the country and is now gearing up to open its first supermarkets.
Walmart earlier this month said it had widened an international bribery probe to include India, Brazil and China in addition to ongoing US and Mexican government investigations. Walmart and Bharti, owner of India's top mobile phone firm, 'have suspended a few associates' pending the outcome of the investigation into whether the firm paid bribes to promote its Indian business interests, a Walmart spokesman said.
The world's biggest retailer, which has said it aims to open its first retail store within two years after entering the wholesale market in 2009, calls its employees 'associates'. Walmart ordered its chief financial officer and four legal counsels to stay away from the office, according to the Economic Times newspaper.
The spokesman would not comment on the identities of those suspended but said: "We are committed to conducting a complete and thorough investigation." The report said auditing and legal team was probing whether Walmart broke the strict US Foreign Corrupt Practices Act, which bars bribing foreign governments officials.
"They want to investigate whether bribes were paid to government officials," quoted a source as saying, adding those suspended were responsible for procuring government licences. Under India's byzantine rules, retailers can need up to 60 regulatory approvals to open a store in India, Arvind Singhal, chairman of Technopak Advisors, a leading business consultancy.
"It can takes months to obtain the approvals so if they don't have the patience it can open the way for bribe-giving," Singhal told, specifying that he was not commenting on the Walmart case.
Foreign exchange laws
The supermarket chain also faces a separate Indian probe to establish if it broke foreign exchange laws and secretly invested $100 million in a local supermarket chain — charges it has denied.
The Walmart spokesman said despite mounting troubles the retailer remained 'excited about the opportunity to grow our business in one of the world's most vibrant economies' — although the Economic Times said the bribery probe would delay rollout of some stores in India.
The government in September cleared the entry of foreign supermarkets like Walmart as part financial reforms blitz ending years of policy paralysis.
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