2010 in a multibrand retail business.
In September, Achuthan raised the issue in parliament, questioning 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, via its Mauritius arm, 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.
The law enforcement official confirmed that the Enforcement Directorate was looking at Cedar.
The main part of this investigation will be whether they (Wal-Mart) offered a credit line. They have not made an equity investment directly, but even if they offered a credit line, you cannot do that, said Harminder Sahani, managing director at Wazir Advisors, a retail consultancy.
Wal-Mart's Indian partner, Bharti Enterprises, has also denied the allegation. We are in complete compliance of all regulations. All details have been shared with the relevant authorities, a Bharti Enterprises spokesman said.
The news came a day after Wal-Mart reported disappointing quarterly sales and as it announced internal inquiries or investigations into bribery allegations in Brazil, China and India - additions to its original probe in Mexico.
The Indian law enforcement official said the probe was being carried out under the Foreign Exchange Management Act (FEMA), which regulates domestic currency markets, including foreign direct investments and capital transactions.
The official said the agency had asked for documents on Wal-Mart's operations in India from the RBI and the Foreign Investment Promotion Board (FIPB), which clears foreign investment proposals.
The way company affairs work in India, very little is seen as a criminal offense. So even if there are some violations, companies are usually asked to pay a penalty and they are allowed to carry on with their business, said Sahani of Wazir Advisors.