Bharti Wal-Mart suspends top executives amid bribery probe

India News Bulletin Desk
Wal-Mart suspends top Indian execs amid bribery probe
Image: Wikimedia Commons

Amid an ongoing internal investigation into alleged corrupt practices, global retailer Wal-Mart has suspended top staff including chief financial officer and legal executives at its Indian operations, according to reports.

It is alleged that Wal-Mart is involved in practices in India that violated the US Foreign Corrupt Practices Act (FCPA) compliance regulations. Under the FCPA, it is a crime for US corporations or their subsidiaries to bribe foreign officials.

The corruption probe comes just months after the Indian government opened the retail sector to 51% FDI and US retail giant Wal-Mart became one of the first companies to announce its retail plans for India.

The retailer has a joint 50:50 venture in India with Bharti Enterprises. Under India’s radical FDI reforms announced in September 2012, international retailers including Wal-Mart, Tesco, Carrefour will be able to offer a majority of investment (51% FDI) to expand their presence in the country.

Wal-Mart is now investigating if its staff paid bribes to win business in India.

“We take compliance with the FCPA very seriously and are committed to having a strong and effective global compliance program in every country in which we operate,” said David Tovar, vice president of corporate communications at Wal-Mart. “We will not tolerate noncompliance anywhere or at any level of the company. We are working diligently to strengthen our compliance programs and dedicating considerable resources to this effort.”

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The retailer, so far has spent more than $35m on its FCPA compliance review efforts over the past 18 months. 

While India media claim that the CFO has been suspended, Wal-Mart India itself has not confirmed or denied it.

Separately, in October, the financial regulators in India launched an inquiry into allegations that the American retailer violated the rules guiding the foreign direct investment (FDI) in retail in the country prior to the new reforms.

The company has however denied that the suspension or the investigation will affect its expansion strategy for India in 2013.
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