We have zero tolerance for corruption: Amazon on bribery charges in India

Amazon on Monday said that it has zero tolerance for bribery and will investigate all allegations of corruption fully, responding to a report by a media platform that alleged that the US-based e-commerce giant has begun an internal investigation into the claims of graft.

The world’s largest online retailer has initiated an investigation into the conduct of its legal representatives in India, according to a report by media platform The Morning Context. The report said this investigation comes on the back of a whistleblower complaint alleging that certain monies paid by Amazon in legal fees have been funnelled into bribes by one or more of its legal representatives. It has been reported that the company has placed a senior employee on leave. The report cited two individuals who work with Amazon’s in-house legal team.

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

Citing sources, The Morning Context report, said Amazon is investigating whether legal fees financed by it was used for bribing government officials. However it didn't identify the government officials. Amazon has placed Rahul Sundaram, a senior corporate counsel, on leave, according to the report.

With the country’s online market projected to soar to $1 trillion, Amazon is in a fierce battle with Walmart-owned Flipkart, Reliance's JioMart and Tata Group, which are also betting big on e-commerce. Amazon has so far committed over $6.5 billion to the India market and Amazon's new CEO Andy Jassy has made a pledge to do more. The firm, which employs over 1 lakh professionals across the country, has made a pledge to digitize 10 million small businesses, enable 10 billion in exports, and create two million jobs in India by 2025. 

The new development comes months after a Reuters report in February this year citing internal documents suggested that Amazon had circumvented local laws on foreign direct investment (FDI) in e-commerce.The Reuters report talked about how Amazon has given preferential treatment to a small group of sellers on its India platform, publicly misrepresented its ties with the sellers and used them to circumvent increasingly tough foreign investment rules that affect e-commerce.

Amazon is also subject of an ongoing antitrust investigation in India.Last month the Supreme Court refused to interfere with Karnataka High Court's order which declined to stop the investigation initiated by the Competition Commission of India (CCI) against Amazon and Flipkart for alleged anti-competitive practices.

A few trade bodies perceive Amazon and Flipkart as threats to local retailers and have alleged preferential treatment to select sellers.

Confederation of All India Traders (CAIT), which represents 70 million traders, has demanded a CBI (Central Bureau of Investigation) inquiry related to the report about the conduct of its legal representatives in India that the online retailer is looking into after allegations of corruption come to light.CAIT has sent a communication related to this to Union Commerce Minister Piyush Goyal. The organisation is also moving a representation to  U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler. It said that SEC is the repository body of the Foreign Corrupt Practices Act (FCPA) law of the U.S.

Stating why the CBI inquiry is needed, CAIT National President B.C.Bhartia and Secretary General  Praveen Khandelwal said that the matter relates to the credibility of the government. They said that it is also to be inquired whether the alleged bribery has any connection with the ongoing investigation or is related to (allegations) of continuous violation of the law and rules by Amazon.  “The above steps are very much required to protect Indian e-commerce market and the retail trade from undue influence, abuse of dominance and connivance with Government officials which falls under Anti-Corruption Act,” alleged Bhartia and Khandelwal.

 “The recent targeting of Amazon is unsurprising. For all the good work done by Amazon for SMBs (small and medium businesses), they seem to be in the eye of a storm created by vested entities,” said K. Narasimhan, Advocate, Madras High Court. “Considering the high standards of compliance maintained by MNCs, I am confident that the matter will be resolved soon.”