India Is Said to Get Query on Wal-Mart Investments
Stock Chart for Wal-Mart Stores Inc (WMT)
An Indian lawmaker has written to Prime Minister Manmohan Singh’s office, questioning whether Wal- Mart Stores Inc. (WMT) violated rules while making Indian investments, according to a commerce ministry official in New Delhi, who asked not to be identified because he isn’t authorized to speak on the subject.
The prime minister’s office has passed the letter from M.P. Achutan of the Communist Party of India to other departments for examination and hasn’t requested a probe, the official said. Wal-Mart said in an e-mailed statement it’s in “complete compliance” with India’s investment laws.
India’s government in September decided to allow foreign companies to invest in multi-brand retail store chains, a sector they had previously been barred from.
“All procedures and processes have been duly followed and details filed with relevant Indian government authorities,” Wal-Mart, the world’s largest retailer, said in the statement.
This week the Bentonville, Arkansas-based retailer created a position to monitor international business units amid a bribery probe at the company’s Mexico operations. Daniel Trujillo will start as senior vice president and chief compliance officer of its international operations on Oct. 29, according to a company memo.
Wal-Mart is being investigated in India over accusations it secretly invested in supermarkets, the Financial Times reported today.
The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating possible violations of the Foreign Corrupt Practices Act. The government agencies are probing allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores.
In India, Wal-Mart may open retail outlets in the world’s second most-populous country over the next 12 to 18 months, Scott Price, head of Wal-Mart’s Asia operations, said in a Sept. 21 interview in Hong Kong. At that time, it operated 17 wholesale outlets in India with billionaire Sunil Mittal’s Bharti Enterprises.
International retailers including Carrefour SA (CA) and Tesco Plc (TSCO) have been setting up wholesale operations to gain a foothold in India, where policy makers had debated the ownership rules for retail for at least seven years. The change in rules allows overseas supermarket chains to own as much as 51 percent in local ventures.
In 2007, Wal-Mart formed a joint venture in India for wholesale stores and has been building a supply chain and logistics network in the country.
Wal-Mart owns a 50 percent stake in the wholesale-venture with Bharti. Closely held Bharti runs its own chain of more than 186 Easyday stores including supermarkets. Bharti Airtel Ltd. (BHARTI), India’s largest mobile phone carrier, is a part of the Bharti group.
Wal-Mart can meet the minimum $100 million investment set by the government and the requirement for overseas companies to spend at least 50 percent of that on back-end infrastructure within three years, Price said.
Wal-Mart fell 0.6 percent to $76.56 yesterday in New York.
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