Wal-Mart India unit suspends CFO, others pending probe

MUMBAI Sat Nov 24, 2012 1:35am IST

A worker arranges oranges at a Bharti Wal-Mart Best Price Modern wholesale store at Zirakpur in Punjab November 16, 2012. REUTERS/Ajay Verma

A worker arranges oranges at a Bharti Wal-Mart Best Price Modern wholesale store at Zirakpur in Punjab November 16, 2012.

Credit: Reuters/Ajay Verma

Related Topics

Stocks

   

MUMBAI (Reuters) - The Indian joint venture of Wal-Mart Stores Inc (WMT.N) has suspended its chief financial officer and other employees as it investigates alleged violations of U.S. anti-bribery laws, a development that could hamper India's efforts to open its domestic supermarket sector to foreign investment.

Wal-Mart, the world's largest retailer, said last week it has opened internal inquiries or investigations into bribery allegations in a number of countries including Brazil, China and India, which follows an earlier probe in Mexico.

"The suspension is a routine global practice followed in such investigations," an official at the Indian unit said, declining to be named. "We cannot carry out a fair investigation when the people we are investigating are in office. What we must not forget is they are innocent until proven guilty," the person said.

Separately, a spokeswoman for the joint venture confirmed the suspensions and said the venture was "committed to conducting a complete and thorough investigation." Wal-Mart's partner in the venture is Bharti Enterprises.

Wal-Mart, the world's largest retailer, declined to say whether similar suspensions could be carried out elsewhere as its investigation proceeds.

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

If any alleged improper conduct occurred, then the suspensions by Wal-Mart "will serve it well in the eyes of enforcement agencies" such as the Department of Justice and the Securities and Exchange Commission, in deciding how to resolve the broader case, said Mike Koehler, assistant professor of law at Southern Illinois University School of Law, who also runs the FCPA Professor blog, a forum focused on the Foreign Corrupt Practices Act.

"Suspensions are common in situations like this. Companies that are under FCPA scrutiny want to demonstrate to enforcement agencies that upon learning of improper conduct, they took effective remedial measures," said Koehler. "Part of doing that is to isolate current employees from their positions, so that any improper conduct does not continue."

Indian authorities are also investigating claims that Wal-Mart violated foreign exchange rules when it invested $100 million in a domestic unit owned by its wholesale joint-venture partner.

Opposition parties and allies within the Congress party-led coalition government in New Delhi are opposed to allowing global giants like Wal-Mart into the retail sector, saying to do so would drive small traders out of business.

After several delays, the government in September finally allowed foreign direct investment in the sector to revive stalled reforms and help halt a slide in economic growth.

On Thursday, when the parliament opened for its winter session, opposition politicians demanded a debate and vote on the policy decision and have threatened to halt parliamentary proceedings.

(Reporting by Nandita Bose, additional reporting by Jonathan Stempel in New York and Jessica Wohl in Chicago; Writing by Ranjit Gangadharan; Editing by Matt Driskill and Richard Chang)

FILED UNDER:
  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage