India Probe on Wal-Mart Lobbying Inconclusive, Document Shows

An investigation into allegations that Wal-Mart Stores Inc. (WMT) lobbied Indian government officials ended without any conclusions, according to a government document obtained by Bloomberg.

The investigation by retired judge Mukul Mudgal was unable to rule on the matter as it didn’t have the power to summon information from the company, according to the document. India’s cabinet deferred discussion on the report, Neelam Kapur, a government spokesman, told reporters in New Delhi yesterday.

Wal-Mart has lost senior executives in recent months in India, where it faces a separate government probe and is going through an internal bribery investigation. The Bentonville, Arkansas-based retailer currently operates a chain of 20 wholesale stores in India with billionaire Sunil Mittal’s Bharti Enterprises Pvt.

It is “not possible for it to conclude in the absence of any material evidence available on record till now that Wal-Mart indulged in any lobbying bribery,” according to the cabinet note summarizing the findings of the investigation. Lobbying is illegal under Indian laws.

India’s cabinet in January appointed Mudgal to probe claims that Wal-Mart broke rules as it lobbied to enter the country’s retail market. Wal-Mart spent as much as $25 million since 2008 on discussions regarding its foreign investments, including in the Indian retail industry, the Press Trust of India reported on Dec. 9. Opposition lawmakers in parliament alleged part of the money was spent in India.

Photographer: Prashanth Vishwanathan/Bloomberg

A cashier weighs vegetables at a check-out counter at a Bharti Walmart wholesale store in Zirakpur, India. Close

A cashier weighs vegetables at a check-out counter at a Bharti Walmart wholesale store... Read More

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Photographer: Prashanth Vishwanathan/Bloomberg

A cashier weighs vegetables at a check-out counter at a Bharti Walmart wholesale store in Zirakpur, India.

India in September last year opened up its retail market to allow foreign companies to own as much as 51 percent of local ventures that sell more than one brand. Overseas firms such as Wal-Mart had been banned from the supermarket industry until then.

Investment Violations

“Wal-Mart is optimistic about growing our Best Price Wholesale cash and carry business in India, as well as future retail investment opportunities,” Wal-Mart said in a statement Sept. 12.

Separate from the lobbying probe, an Indian government agency is investigating allegations that Wal-Mart violated rules governing foreign investment in the retail industry, Trade Minister Anand Sharma said in December.

Wal-Mart has said it’s investigating possible violations of the Foreign Corrupt Practices Act in India, Brazil and China along with Mexico.

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, which operates 20 cash and carry stores in the country, according to Wal-Mart spokeswoman Arti Singh. Bharti Airtel Ltd. (BHARTI), India’s largest mobile phone carrier, is a part of the Bharti group.

To contact the reporters on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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