American retail major Walmart is learnt to have told the investigation committee probing its lobbying activities to gain greater access to the Indian market that it used the services of several international advisors and consultants with respect to foreign investment in multi-brand retail in India. Also, at least 19 companies, entities or individuals may have assisted Walmart in getting operation licences and permits in India, Scott Price, president and CEO of Walmart Asia, told the Justice Mukul Mudgal Committee earlier this month, according to sources in the government.
Price was replying to questions posed by the probe panel that was constituted after the Walmart lobbying issue rocked the winter session of Parliament.
Pointing out that Walmart engages advisors in evolving regulatory and legislative issues and understand the political and public policy environment in key markets, the company told the panel that these advisors may also help facilitate meetings between Walmart executives and government officials. As for foreign direct investment (FDI) in India, Walmart has used the advisory services of US-based Albright Stonebridge Group, which has an exclusive arrangement with India's 9.9 Media, and American consultant McLarty Associates, among others, according to sources.
To a query on the alleged violations of the Foreign Corrupt Practices Act (FCPA), the company is understood to have stated that Bharti Walmart (its JV with Bharti for wholesale or cash and carry operations) has used firms to help the company obtain certain government approvals such as permits and licences for store operations.
The companies and entities that may have assisted Bharti Walmart in obtaining operating permits and licences, at least 19 of them, include Abhishek Aggarwal & Associates, Astrea Legal Associates, Lex Ethos, Advocates & Legal Consultants, Mynd Solutions, Rajiv Ranjan Singh & Associates, Sabari Consultancy, Tele Backup Services, and Vocation Consulting, among others.
Bharti Walmart has suspended further use of permits and licensing services of some of these firms till investigations are completed, Price is learnt to have told the panel.
When asked about the internal investigation into the FCPA violations, Walmart told the inquiry committee that no findings have been reached as far as activities in India are concerned. It also said that no Bharti Walmart employee had been terminated so far in connection with the FCPA investigation. However, the company added that certain employees of Bharti Walmart - Pankaj Madan and Mohd Javed - were placed on paid suspension, pending further investigation.
While stating there's no separate account for expenditure involved on India lobbying, Walmart told the inquiry committee the company discussed its business interests in India with US government officials, along with several other issues, according to government sources.
The company is also learnt to have said that it is "not aware of any Indian public official or government entity that has received any cash or in kind benefits" from Walmart or its consultants in connection with FDI lobbying activities.
Till September 2012, FDI was not permitted in multi-brand retail, although 100 per cent foreign investment was allowed in the wholesale or cash and carry business.
While waiting for FDI to be allowed in multi-brand retail, Walmart entered a 50-50 joint venture with the Bharti group around six years ago to set up cash and carry stores in India. In September 2012, the Union Cabinet allowed up to 51 per cent FDI in multi-brand retail.
Walmart India president Raj Jain, who also replied to questions posed by the Mudgal Committee on the American retailer's business links with Bharti Retail, said there's a franchise arrangement between the two.
Bharti Retail has been granted certain rights to use the knowhow and systems of Walmart, Jain is learnt to have said. Bharti Retail has given a non-exclusive right to use certain trademarks, he told the panel. In a statement , a Bharti Walmart spokesperson said, "We are cooperating with the Committee. Following the March 22 meeting, we submitted written responses to the Committee's questions in order to provide the Committee with additional clarity regarding our lobbying practices and reports in the US."
While the government had set a deadline of April 30 for investigating the Walmart lobbying matter, the expert panel may seek a short extension till June for completing the probe. The next meeting of the one-man committee is expected by end of the month.
Following reports on Walmart's disclosures before the US Senate that it had spent $25 million on lobbying with US lawmakers over four years on various issues including gaining enhanced market access for investment in India, the opposition parties asked for an investigation into the matter.
This came at a time when there was uproar against the government allowing 51 per cent FDI in multi-brand retail.