|Chennai||Rs. 24470.00 (1.37%)|
|Mumbai||Rs. 24900.00 (0.97%)|
|Delhi||Rs. 24200.00 (1.26%)|
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|Hyderabad||Rs. 24140.00 (1.17%)|
Bharti Walmart, the 50-50 joint venture for the cash-and-carry business under the ‘Best Price Modern’ brand, today said it had suspended a few associates of the company, pending the outcome of the investigation into alleged corrupt practices.
The move comes amid the Union government facing opposition in the winter session of Parliament for allowing up to 51 per cent foreign direct investment (FDI) in the multi-brand retail segment.
Walmart, the world’s largest retail chain has been waiting for about five years to set up stores in India. Due to the prohibition on FDI in multi-brand retail, the $447-billion chain had tied up with the Bharti group for operating cash-and-carry outlets, for which up to 100 per cent foreign investment was allowed. The two groups had planned once FDI was allowed, they would enter the multi-brand category together. There has been no announcement from either Walmart or Bharti on their multi-brand retail plans, after the government recently opened the sector partially.
Though the company refused to name the suspended executives, it is learnt executive vice-president and chief financial officer Pankaj Madan was among the five employees told not to report for work till investigations into the matter were over.
The remaining four are from the company’s legal team.
Sources said more suspensions couldn’t be ruled out, as investigations progressed. Madan has been with Bharti Walmart for several years. Earlier, he had stints with Cargill’s Thailand business and Telstra’s Singapore operations.
Replying to a query on the number of people suspended and the reasons for this, a Bharti Walmart spokesperson said, “We are committed to conducting a complete and thorough investigation.” Admitting Walmart and Bharti had “suspended a few associates, pending the outcome of the investigation”, the official said, “It would be inappropriate for us to comment further until we have completed the investigation.” The answer to a query on what action the company had taken and those it was likely to initiate because of the investigation, was the same.
On whether the group planned to put on hold its plans for multi-brand retail stores in India, as well as expansion of cash-and-carry outlets because of the investigation, the spokesperson said, “We are committed to the Indian market….We remain excited about the opportunity to grow our business in one of the world’s most vibrant economies, expand opportunities for farmers and help lower the cost of living for families in India. We believe allowing 51 per cent foreign direct investment in multi-brand retail is an important step for the government of India to further open this sector and strengthen the Indian economy.”
Stating Walmart considered the Foreign Corrupt Practices Act (FCPA) very serious and complied with it, the company said it was committed to a strong and effective global compliance programme in every country it operated in. Walmart claimed through the past 18 months, it had spent about $35 million on its global FCPA compliance review efforts. In the last six months, the company has roped in professionals from Miami-headquartered international law firm Greenburg Traurig in its anti-corruption drive. These professionals had dedicated about 6,000 hours to providing consulting and on-site FCPA compliance support, Walmart said. “This support has also included procedure and scenario-training to about 1,000 associates across the business units,” the company said, adding, “Subject matter experts have provided FCPA training to 328 senior, business unit- and store-level associates in India.”
In March 2011, Walmart began a worldwide review of its policies, practices and internal controls for FCPA compliance. The company says, “Since the implementation of the global review and the enhanced anti-corruption compliance programmes, the company has identified or been made aware of additional allegations regarding potential violations of the FCPA.” It added, “When allegations are reported or identified, we, together with our third-party advisors, conduct inquiries and when warranted, open investigations.”
The American chain has recorded inquiries or investigations regarding allegations of potential FCPA violations in many foreign markets it operates in, “including, but not limited to, Brazil, China and India”. These were in addition to the investigation underway in Mexico, the company said. Last week, Walmart had admitted to inquiries or investigations into corrupt practices in many countries, including India.
Separately, the Enforcement Directorate is investigating an investment by the American chain in Bharti group to scrutinise violation of the Foreign Exchange Management Act.