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Home » Asian Life » Asian News

Wal-Mart’s India Venture Suspends Executives

Wal-Mart’s Indian joint venture has suspended several senior executives and delayed the opening of some stores in the country as part of an internal bribery investigation, the company said on Friday.

It is the latest in a series of setbacks for the retail giant’s international operations and comes at a particularly sensitive time here because Indian policy makers just recently allowed foreign retailers like Wal-Mart to open stores in the country. The company’s investigation seems to have emboldened opposition lawmakers in New Delhi who are trying to overturn the government’s decision on foreign retailers.

In a statement, Bharti Walmart, a 50-50 joint venture between the Indian company Bharti and Wal-Mart, said it had suspended “a few associates” to ensure “a complete and thorough investigation.” The Economic Times newspaper reported that the suspended employees included its chief financial officer and its legal team but the company would not confirm that.

Earlier this month, Wal-Mart reported that it had expanded a bribery investigation to India, China and Brazil that was initially focused on Mexico. In April, The New York Times reported that executives at the company’s Arkansas headquarters had suppressed an internal investigation that found credible evidence that its Mexican subsidiary had paid bribes in an effort to open more stores in that country.

Bharti Walmart operates 18 wholesale stores in India that are allowed to sell goods to other businesses like retailers, hotels and restaurants. Most of its stores are in northern India but it had planned to expand in the coming months in the south and west. Those plans have now been delayed but the company said in a statement that “we remain excited about the opportunity to grow our business in one of the world’s most vibrant economies.”

Wal-Mart’s Indian joint venture also supplies about 200 supermarkets that are wholly owned by its partner Bharti Retail, and which operate under the brand Easyday.

In a separate inquiry, Indian authorities are looking into whether Wal-Mart violated foreign investment rules by giving Bharti Retail an interest-free loan of $100 million that would later convert into a controlling stake in that company.

In September, Indian policy makers said foreign companies like Wal-Mart could directly enter the retail business with a local partner as long as it did not own more than 51 percent of the business. The long-delayed move came amid significant political opposition — one important regional political party withdrew its support from the governing coalition in New Delhi that is led by the Indian National Congress Party as a result. Days after that change, Wal-Mart officials said they would open retail stores in the country in as little as 18 months.

On Thursday and Friday, opposition lawmakers disrupted the first days of the winter session of Parliament demanding that the government allow a debate and vote on the change in its retail policy, a demand that was turned down.

The latest developments in Wal-Mart’s internal investigation could strengthen the hand of the opposition because Indian policy makers are already struggling to recover from allegations of corruption involving industries like telecommunications, energy and mining.

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