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

   

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:

Economic Pulse

REUTERS SHOWCASE

Vodafone Tax Dispute

Vodafone Tax Dispute

India advised against challenging Vodafone tax ruling - source  Full Article 

Banking Sector

Banking Sector

India's laggard state lenders face tough sell on capital raising plan  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Falling Oil Prices

Falling Oil Prices

Saudis signal no push for oil cut as market to "stabilise itself"  Full Article 

Raising Stake

Raising Stake

Nippon Life to raise stake in Reliance Capital fund unit  Full Article 

Sterilisation Camps

Sterilisation Camps

Sterilisation targets remain in all but name, critics say  Full Article 

Share Buyback

Share Buyback

Samsung Electronics to buy back $2 billion in shares  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Flashback: 26/11

Flashback: 26/11

The three-day attack in November 2008 left 166 dead.  Slideshow 

Reuters India Mobile

Reuters India Mobile

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