Walmart lobbying case 'closed'

Lack of conclusive evidence of bribery cited

The investigation into lobbying by Walmart, an issue that had rocked the winter session of Parliament last year, has been closed due to lack of any conclusive evidence of bribery in the India market, according to sources.

The one-man committee of former chief justice of Punjab and Haryana High Court Mukul Mudgal, probing the matter for the past few months, is likely to submit its report to the government early next week.

Mudgal refused to comment.

It is learnt that the report may not say the US-based retail giant did not bribe any Indian official or contravene Indian rules while trying to gain wider access to the market here. However, it is likely to state that there was no adequate evidence to suggest that Walmart was involved in any unlawful activity in India. Sources said the panel might also recommend that India frame rules to make lobbying by companies legal.

The Cabinet had cleared up to 51 per cent foreign direct investment (FDI) in multi-brand retail in September 2012, but Walmart is yet to make a proposal to the government for opening retail stores. The $447-billion retail chain, the largest in the world, could only set up cash-and-carry outlets in the absence of FDI in multi-brand retail till recently. Since 2009, Walmart and Bharti, in a 50-50 joint venture, operate 20 stores in the cash-and-carry segment, a sector where 100 per cent FDI is permitted.

Just when things had started to look up for Walmart in India, reports alleging bribery in its Mexican operation had surfaced. This was quickly followed by the company suspending at least five of its India employees for suspected corruption. In November 2012, Walmart extended an internal investigation into bribery charges in Mexico to India, China and Brazil. Soon came the disclosures on Walmart lobbying with US senators on multiple issues, including gaining wider access to the Indian market.

The company said it had paid $25 million between 2008 and 2012 towards lobbying fees. Walmart had said lobbying was legal in the US.

But Opposition members of Parliament (MPs), already upset with the government move to open up multi-brand retail to foreign investors, demanded a judicial probe into the lobbying issue. The government set up the Mudgal committee in January. The government set up the Mudgal committee in January.

The controversy around lobbying and other investigations into its links with the Bharti group for alleged Foreign Exchange Management Act (FEMA) violation had halted Walmart’s India plans. Not only did the company not take any step to get into front-end retail in the country, something that it has lobbied for over several years, it even stopped expansion of its cash-and-carry business.

Bharti Walmart had said in a statement last year, “all organisations which expend more than $11,500 annually on lobbying activities and employ at least one lobbyist must register and file the quarterly reports.” The company argued, “The allegation that a routine US lobbying disclosure form reflects improper conduct on our part in India is false. This disclosure has nothing to do with political or governmental contacts with India government officials.”

A separate corruption probe is being conducted by Walmart to ascertain if there were any violation of the Foreign Corrupt Practices Act, 1977, in the US. This Act makes it illegal for American companies to pay bribes anywhere in the world.

Lobbying does exist in India, lawyers pointed out. Fancy designations and consultation fees are given to lobbyists in India, and the same is reflected in the balance sheets as well, a corporate lawyer said. “Nobody has questioned all that.”

The Ministry of Corporate Affairs is handling the administrative issues related to the Mudgal committee probe. Officials of the Department of Industrial Policy and Promotion had attended the committee’s meetings to discuss the Walmart lobbying issue.

MEXICO TO INDIA
Timeline of Walmart lobbying issue

• Apr 2012: The New York Times reports executives at Walmart’s Arkansas headquarters suppressed an internal probe that found evidence that its Mexican subsidiary had paid bribes to open more stores in that country
• Sept 2012: India allows up to 51% FDI in multi-brand retail
• Nov 2012: Walmart discloses it had expanded a bribery investigation initially focused on Mexico to India, China and Brazil; Bharti Walmart  suspends a few “associates” to ensure “thorough investigation”
• Dec 2012: Walmart’s US lobbying disclosures rock Parliament
• Jan 2013: One-man committee set up to probe Walmart’s lobbying activities in India