CBI says Wal-Mart violated investment rules

MUMBAI Fri Jul 19, 2013 10:17pm IST

1 of 2. People walk past a Wal-Mart sign in Rogers, Arkansas June 4, 2009.

Credit: Reuters/Jessica Rinaldi/Files

Related Topics

Stocks

   
Election 2014

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

MUMBAI (Reuters) - Wal-Mart Stores Inc(WMT.N) violated Indian rules governing foreign investment, the Central Bureau of Investigation (CBI) said in a letter to a member of parliament seen by Reuters.

The CBI said in the letter that according to its analysis, Wal-Mart's investment violated Reserve Bank of India guidelines and Foreign Exchange Management Act regulations.

However, it said violation of FEMA regulations does not fall under its remit, so it could not investigate the matter.

Wal-Mart, the world's largest retailer, has been investigated for putting money into a retailer before the government opened the sector to global players in September 2012. It entered India in 2010 with a $100 million investment in a consultancy, Cedar Support Services, which was a retailer when it began its corporate life.

Wal-Mart has denied breaking investment rules and said on Friday it had cooperated with the government during the investigation.

Its entry into Asia's third-largest economy has been slowed by several issues, including an internal bribery probe and still-evolving rules governing the retail sector.

The CBI sent the letter to M.P. Achuthan, a communist member of parliament, who in September had accused Wal-Mart of breaking entry rules.

At the time, the Indian government asked its Enforcement Directorate, which investigates financial crimes, to look into the case. The Enforcement Directorate has not announced any decision and on Friday could not be reached for comment.

A CBI spokeswoman did not provide further details.

"After nine months of the case not moving ahead at the Enforcement Directorate, I wrote to the CBI and asked them to intervene and investigate and they have found violations," Achuthan told Reuters.

"This certainly takes the investigation forward and now the ED should act quickly," he said.

Senior government officials told Reuters last November that if Wal-Mart was found to have broken the law, it could face a penalty of up to three times its initial $100 million investment. (Editing by Tony Munroe and David Holmes)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Eyeing Role

Eyeing Role

Top economist Jagdish Bhagwati eyes role in Modi government  Full Article 

Election 2014

Election 2014

Breakingviews: Singh wasn’t king, Modi could be  Full Article 

Telecom Sector

Telecom Sector

Japan's NTT DoCoMo to exit India telecoms joint venture - sources  Full Article 

Next Nokia CEO

Next Nokia CEO

Nokia to name Rajeev Suri as next CEO on Tuesday - report  Full Article 

Conspiracy Lawsuit

Conspiracy Lawsuit

Apple, Google agree to pay over $300 million   Full Article 

Stock Split Trend

Stock Split Trend

Trend-setter Apple's stock split could bring out the copycats  Full Article 

Winning Start

Winning Start

Microsoft beats Wall Street on new CEO debut   Full Article 

Reuters India Mobile

Reuters India Mobile

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