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Walmart Suspends India Employees

Walmart as suspended several employees in India as the world's biggest retailer by sales pursues an internal investigation into whether its local joint venture in the promising Asian market violated US anti-corruption laws.

Indian employees welcome Bharti Wal-Mart President Managing Director and CEO Raj Jain (unseen) following an inauguration ceremony of a newly opened Bharti Wal-Mart Best Price Modern wholesale store in Hyderabad on September 26, 2012.
Noah Seelam | AFP | Getty Images
Indian employees welcome Bharti Wal-Mart President Managing Director and CEO Raj Jain (unseen) following an inauguration ceremony of a newly opened Bharti Wal-Mart Best Price Modern wholesale store in Hyderabad on September 26, 2012.

The suspensions are related to the US retailer's widening probe into allegations that employees in several key emerging markets bribed government officials.

Walmart this month said a probe into allegations that bribes were paid to secure permits for new stores in Mexico had been widened to other emerging markets including India, China and Brazil.

On Friday, Walmart said its Indian joint venture with Bharti Enterprises had suspended "a few associates", but declined to give any details about those under scrutiny.

"We are committed to conducting a complete and thorough investigation," the company said. "It would be inappropriate for us to comment further until we have finished."

The probe into possible violations of the US Foreign Corrupt Practices Act, which prohibits bribery outside of the US, is another headache for Walmart in India. The retailer hopes to scale up its business following New Delhi's long-awaited decision to allow foreign direct investment in front-end retail business.

Walmart is simultaneously being examined by the Reserve Bank of India, which has been asked to determine whether it covertly invested in a chain of 220 convenience stores and hypermarkets in 2010 in contravention of a ban on foreign companies owning any stake in retail businesses.

The company on Friday affirmed its commitment to India, saying it remained "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".

Walmart and its partner Bharti Enterprises have been working together since 2007 to navigate the complex Indian policy environment for retailing. The two companies set up a 50-50 joint venture, Bharti Walmart, for a wholesaling business, an activity in which India has permitted up to 100 per cent foreign ownership since 2006.

Bharti Walmart now runs 17 Best Price Modern Wholesale stores, a cash and carry business. Walmart also provides extensive technical and management support for a chain of consumer retail stores, EasyDay, which is ostensibly wholly owned by Bharti.

But claims by an Indian politician that Walmart had "clandestinely and illegally invested" $100m in the Easy Day chain triggered a government investigation.

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