Pending bribery probe, Wal-Mart puts India expansion on ice

In a sign of heightening caution, Wal-Mart has put on hold opening of new stores in India pending the investigation into the bribery charges. This has also prompted some of its staff to quit the company.

According to a report in The Economic Times today, Bharti Wal-Mart, the joint venture between Bharti and Wal-Mart was planning to open seven cash and carry outlets across the country over the last five months. However, the company brought about some last minute changes as it tightened licensing procedures, the ET report said.

[caption id=“attachment_658384” align=“alignleft” width=“380”] Wal-Mart has had a bumpy ride in India. First there were allegations that the company’s investment in Bharti was illegal. This is being probed.AP[/caption]

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The locations included Sangli and Sholapur in Maharashtra, Anand in Gujarat and Jabalpur in Madhya Pradesh, said the report.

According to the spokeswoman quoted in the report, the company has enhanced the procedures for licensing, which has resulted in the delay in expansion.

She has also said the staff who were recruited in these locations were encouraged to take up positions in other existing stores. However, some of the staff have quit. According to the report, 30 of them have resigned at one location.

Wal-Mart has had a bumpy ride in India. First there were allegations that the company’s investment in Bharti was illegal. This is being probed.

Then came the damning company disclosure in the US that it had spent about Rs 125 crore since 2008 for lobbying. The company had said the lobbying was also to gain greater market access in India.This sparked controversy in India.

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According to a recent PTI report, a government-appointed committee is probing whether Walmart undertook any activity in India in contravention of law. The panel will submit its report by April.

“The government has appointed one-man inquiry committee regarding media reports concerning Wal-Mart vide resolution dated January 31, 2013. The committee has been asked to submit its report within three months from issuance of the resolution,” Minister of State for Commerce and Industry S Jagathrakshakan had said in a written reply to the Lok Sabha.

The member of the committee is former Chief Justice of Punjab & Haryana High Court Justice Mukul Mudgal.

Earlier CNBC-TV18 had reported that the panel has summoned Wal-Mart executives on 22 March. US officials are also expected to be present during the meet.

First meeting of the Wal-Mart probe panel was attended by 3 secretaries of Ministry of Corporate Affairs (MCA), Department of Industrial Policy and Promotion (DIPP) and Ministry of External Affairs (MEA).

The MCA, DIPP and MEA secretaries have been asked to submit information to probe committee.