October 20, 2012
India's commerce ministry has requested that the central bank look into Walmart's dealings in the country. The move comes after a lawmaker's letter last month charging the multi-national company with illegally investing in India.
October 20, 2012
India's commerce ministry has requested that the central bank look into Walmart's dealings in the country. The move comes after a lawmaker's letter last month charging the multi-national company with illegally investing in India.
US retail giant Walmart on Friday denied accusations it broke rules banning foreign investment in Indian supermarkets while the government said no formal inquiry had been ordered.
Any investments were "in complete compliance with India's foreign direct investment laws" and all "processes have been duly followed and details filed with relevant Indian government authorities," a Walmart spokeswoman told AFP.
India's commerce ministry said it asked the central bank to look into the allegations by a lawmaker that Walmart broke foreign investment laws and "clandestinely" invested $100 million in a local supermarket chain.
But a senior ministry official told AFP on condition of anonymity that media reports a government "probe has been ordered is too strong a word," adding: "I would not call it a probe — rather an examination."
Communist lawmaker M.P. Achuthan, whose party opposes foreign investment in the $500-billion retail sector, made the charges in a letter last month to Premier Manmohan Singh's office.
It forwarded the complaint "as a matter of routine" to the commerce ministry under whose domain the sector falls, the ministry official said.
The ministry sent on the letter "for examination by the Reserve Bank because the allegations involved remittances", said the commerce ministry official.
The focus on Walmart's Indian investments comes as its operations elsewhere globally have come under attention. Earlier this year, Walmart's Mexican unit faced accusations of bribing officials to boost its market position.
Achuthan also charged that two years ago a Walmart unit "illegally" invested in debt securities of a holding company that owns Bharti Retail, which runs more than 200 Easyday supermarkets throughout India.
These securities, the lawmaker said, could be converted into a 49 percent equity stake in the holding company — part of the business empire built by India's telecom tycoon Sunil Bharti Mittal.
The alleged infraction of Indian rules took place when a government ban was in place preventing overseas investments in "multibrand" retailers — stores selling more than one brand of goods. That ban is no longer in place.
Courtesy: AFP
