Amazon starts probe after news report claims corruption in India operations

US company says it has zero tolerance for graft and is investigating its legal representatives' conduct in India.

Amazon.com Inc. stressed it has zero tolerance for graft and will investigate all allegations of corruption fully, responding to a report by an Indian news outlet that the U.S. e-commerce giant has begun an internal investigation into claims of bribery.

The U.S. company started a probe into its legal representatives’ conduct in India, the Morning Context, a two-year-old media site that typically covers local affairs, reported Monday, citing three people familiar with the matter. Amazon didn’t address specifics in the report but issued the statement after Bloomberg contacted local spokespeople for comment.

“We have zero tolerance for corruption,” Amazon said in its emailed response. “We take allegations of improper actions seriously, investigate them fully, and take appropriate action. We are not commenting on specific allegations or the status of any investigation at this time.”

A whistleblower within Amazon flagged the alleged bribery issues in its Indian operations, prompting the company to start its probe, the Morning Context said. Amazon is investigating accusations that legal fees paid by the company have been used as bribes, the news outlet reported. The company has placed a senior employee on leave, the Morning Context said, citing two individuals who work with Amazon’s in-house legal team.

Andy Jassy, Amazon’s new chief executive officer, is targeting India for growth even as challenges mount in what is arguably the online retailer’s most important market for expansion. The company is up against Walmart Inc.-backed Flipkart Internet Pvt. as well as billionaire Mukesh Ambani’s retail websites including JioMart, all seeking a bigger slice of a potential market topping a billion consumers. Amazon, which employs more than 100,000 across India, has pledged to digitize 10 million small business, enable $10 billion in exports and create two million jobs in the country by 2025.

Last month, India’s Supreme Court allowed an antitrust investigation to proceed against Amazon’s local unit and Flipkart for allegedly abusing their dominance by offering deep discounts and preferential treatment to some vendors. The South Asian nation is tightening regulations for online retailers following years of protests by local brick-and-mortar traders who fear that deep-pocketed global competition could push them out of business.