Day after suspension of executives, company halts opening of stores
Bharti Walmart, the Indian arm of US-based retail giant Walmart, which suspended five people as part of an ongoing global investigation into corrupt practices on Friday also put a halt to opening new cash and carry wholesale stores in India until the probe is over.
The suspension of five executives, including Pankaj Madan, the chief financial officer of its Indian joint venture entity Bharti Walmart, has come at a time that may slow the company?s expansion plans in the country, say sector analysts.
The government has recently allowed foreign retail chains to invest up to 51% in front-end multi-brand retail stores. Walmart and Bharti which already have a 50:50 joint venture wholesale firm had stated about extending their partnership to the front-end stores also. This, analysts feel may now face delays. Also the government is under fire from opposition parties for allowing foreign investment in multi-brand retail and a discussion is due in Parliament. Analysts feel that the development may give a handle to the opponents of FDI in multi-brand retail, who may now sharpen their attacks on the company.
The suspension of the five executives comes as part of an ongoing global investigation by the American retail giant against alleged corrupt practices, sources said.
?We are committed to conducting a complete and thorough investigation. Walmart and Bharti have suspended a few associates pending the outcome of the investigation. It would be inappropriate for us to comment further until we have finished the investigation,? said a spokesperson for Bharti Walmart.
Bharti Walmart is a 50:50 joint venture between Bharti Group and Walmart stores for running of wholesale stores under the Best Price Modern Wholesale brand.
As per the reports, the Reserve bank of India has already asked the Enforcement Directorate (ED) to probe Walmart?s investment in an arm of Bharti Enterprises, Cedar Support Services, for alleged violations of forex laws. Bharti Enterprises has, however, rejected the allegations that it had violated any rule in this regard. The company had said all the procedures were as per the ?law of the land?.
?If we see it in the light of events that have fallen in for the company, this move is just to save their face as they may have found a loose end which might put them in fresh troubles,? said a legal expert who did not wish to be named.
Last week, Walmart had said it was investigating allegations of violation of Foreign Corrupt Practices Act (FCPA) of the US, that bars bribing officials of foreign governments, in India and other countries including China and Brazil.
Commenting on their India operations, the Bharti Walmart 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 that allowing 51% foreign direct investment in multi-brand retail is an important first step for the government of India to further open this sector and strengthen the Indian economy.?
