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

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

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:

REUTERS SHOWCASE

WTO Trade Deal

WTO Trade Deal

WTO clinches first global trade deal in its history  Full Article 

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Read 

OPEC Meeting

OPEC Meeting

Saudis block OPEC output cut, oil price sinks further.  Full Article 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

India moves to allow more businesses to offer basic financial services.  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Reuters India Mobile

Reuters India Mobile

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