The investigation into the alleged corrupt practices in the Indian operations of Walmart and suspension of five executives have sparked speculation that the American chain and its cash-and-carry partner, Bharti, may review their proposed multi-brand retail venture. However, despite the buzz following the corruption probe, both Walmart and Bharti, which often refer to each other as "natural partners", told Business Standard their position remained unchanged for the proposed multi-brand retail joint venture (JV).
To a question on whether they were talking to other companies for a multi-brand retail JV, a Bharti Walmart spokesperson said, "Our partnership (in cash and carry) with the Bharti group is a natural progression for front-end retailing." She added, "Currently, we are in discussions with them (Bharti) and will inform you as and when we reach an understanding on the business model." Putting at rest any speculation related to Raj Jain, president, Walmart India, who was away for a few days, the spokesperson said "he was attending a long-applied-for family commitment function and has returned to office since Monday."
A Bharti spokesperson maintained, "We remain fully committed to our partnership with Walmart." He added, "We are excited about our plans to grow the retail business, expand opportunities for farmers and SMEs and offer employment opportunity, while contributing to the India growth story."
The companies, however, did not respond to a question on whether the five executives suspended, including the CFO, were hired by Bharti or Walmart.
"We are committed to conducting a complete and thorough investigation. Walmart and Bharti have suspended a few associates pending the outcome of the investigation. As these matters are under review, it would be inappropriate for us to comment further on the specific allegations until we have concluded the investigations," said the Bharti-Walmart spokesperson.
Soon after the Union Cabinet cleared 51 per cent foreign direct investment (FDI) in multi-brand retail in September, Walmart's Jain had told Business Standard, "I think it all boils down to policy clarity, in terms of what kind of partners and partnerships we need." On whether Walmart would explore partnership options beyond the Bharti group, he had said, "All I would like to say is we have a great relationship with Bharti over the last few years. They are our natural partners in India. We would obviously like to explore that. But let's see." Probed further on the whether agreements with the Bharti group would be signed in India or the US, Jain had said, "These are what we are discussing at this point. What agreements we sign and with whom - all that is still under discussion."
Last week, Bharti Walmart said that it had suspended a few associates, pending the outcome of the investigation into alleged corrupt practices.
The Walmart investigation is under the Foreign Corrupt Practices Act (FCPA), and the company follows a global compliance programme in every country it operates in. In the past one and a half years, Walmart spent over $35 million on its global FCPA compliance review efforts, the company said.
It was in March 2011 that Walmart began conducting a worldwide review of its policies, practices and internal controls for FCPA compliance. It is conducting investigations regarding allegations of potential FCPA violations in many foreign markets "including but not limited to Brazil, China and India". The Mexico probe has been going on for much longer.