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No probe ordered into Wal-Mart, India officials say

Source : REUTERS
Last Updated: Thu, Oct 18, 2012 15:50 hrs

MUMBAI/NEW DELHI, Oct 18 (Reuters) - India's government has not ordered a probe into Wal-Mart Stores over accusations the U.S. retailer violated foreign ownership rules, Indian officials said on Thursday in response to a media report.

Wal-Mart, which is expected to open its first Indian store after a change to ownership rules, said it had not been contacted on the subject by Indian authorities.

The Financial Times said the Commerce Ministry last week asked the central bank to investigate allegations that the world's largest retailer had "clandestinely and illegally" invested in supermarkets in the country. The accusations were made by a Communist Party member of parliament in a letter to the prime minister.

An Ministry of Commerce and Industry official, who declined to be identified, said the ministry had forwarded the complaint on Oct. 10 to the Reserve Bank of India for examination, but said the ministry had not asked for a formal probe into the matter.

Pankaj Pachauri, a spokesman for the office of Prime Minister Manmohan Singh told Reuters: "Every letter that comes from an MP is routinely forwarded to the department concerned for examination. We did not order a probe. We got a letter from an MP and in due course we forwarded it to the department concerned."

A Wal-Mart spokeswoman in India, who declined to be named, said the company had not been contacted by the ministry or the central bank and was in full compliance with India's foreign direct investment laws.

"All procedures and processes have been duly followed and details filed with relevant Indian government authorities, including the Reserve Bank of India," the U.S.-based retailer said in a statement.

India recently allowed foreign retailers to own up to 51 percent in supermarkets, a decision made in the face of fierce political opposition. Previously, Wal-Mart and other foreign players were only allowed to own wholesale operations.

Wal-Mart was the most vocal advocate for the rule change and is expected to open its first retail store within 18 months.

The member of parliament from the state of Kerala, M.P. Achuthan, whose party opposes foreign direct investment in retail, accused Wal-Mart of investing $100 million as early as early 2010 in a multibrand retail business.

In September, Achuthan had questioned Wal-Mart's role in Easyday stores, which are controlled by Bharti Enterprises, its partner in a wholesale joint venture.

India's commerce minister answered that Wal-Mart Mauritius(4) Holdings Co Ltd held debentures that are convertible into a 49 percent equity stake in Cedar Support Services, the company previously known as Bharti Retail Holdings that holds Easyday.

An RBI spokeswoman said the central bank does not have investigative powers. Another RBI official declined to comment.

Achuthan told Reuters he had not been told by the government that any investigation had been ordered.



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