Walmart lobbying inquiry inconclusive; fresh probe likely

Walmart may face a fresh probe into its lobbying activities for entering India, after issues raised by a one-man inquiry committee, set up by the government earlier this year to look into this matter, were stonewalled by the global retailer.

The inquiry conducted by the panel remained inconclusive and it was not satisfied with the replies provided by the US-based retail giant on various issues, including on the exact amount spent on its India-specific lobbying activities, sources said.

Pursuant to the suggestions made by the committee, which also observed that it lacked necessary "investigative or summoning powers" to conclude that Walmart indulged in lobbying and bribery for India operations, the government is considering initiating further investigations into the matter, they added.

Separately, Walmart is already facing a probe by the Enforcement Directorate here for alleged violation of FEMA (Foreign Exchange Management Act) norms.

Walmart, on its part, has maintained that it has disclosed all its lobbying activities as per the US rules and it did not violate any Indian regulations in this regard.

The committee, headed by former Chief Justice of Punjab and Haryana High Court Mukul Mudgal, was set up in January after the government announced in Parliament that it would get investigated the issue of Walmart having lobbied hard before the US lawmakers for access to lucrative Indian retail market.

After looking into the matter for about three-and-a-half months, the committee submitted its report last month to the Corporate Affairs Ministry. Besides US, the panel also tried to look into Walmart's lobbying activities with government officials in India.

An 'Action Taken Report' is being prepared after taking into account the comments from the Corporate Affairs Ministry, the Department of Industrial Policy and Promotion (DIPP) and the External Affairs Ministry, sources said.

The same would be first presented to the Cabinet and then would be placed before the Parliament in the next session.

In the meantime, Walmart last week had announced a sudden exit of Raj Jain, head of its Indian venture with Bharti group, and a further probe into the company's affairs could also look into this development.

Jain and Walmart Asia President & CEO Scott Price were the key managerial personnel who represented the company before the inquiry panel.

The committee has said in its report that it was not satisfied with the replies from the company and its representatives on various matters and "nothing conclusive could be established" about Walmart's lobbying activities.

The panel also observed that Walmart was yet to reply to certain queries from the US Congress as well on the issue of alleged bribery in foreign jurisdictions, including in India.

"As and when Walmart replies to the queries of the US Congress fully and an adverse report or disclosure indicating violations of Indian laws is made to the US Congress, the investigation should be carried out by the government," its report is said to have observed.

This committee was set up after a political uproar over disclosure about Walmart's lobbying among the US lawmakers since 2008 for facilitating its entry into the Indian market.

Walmart spent a total amount of USD 6.13 million (about Rs 33 crore) on lobbying for various issues, including on "discussions related to FDI in India", during entire 2012, as per the US Congressional records.

Walmart has been looking to enter Indian retail market for a long time, given the high growth prospects here in this business.

Despite stiff political opposition, the government last year decided to open the sector for up to 51 per cent foreign participation. While Walmart is yet to enter the multi-brand retail business here, it has got a joint venture in wholesale retail business with Bharti group.

Lobbying is a legal activity in the US, but the companies and their lobbyists are required to make quarterly disclosures about the same to the US Congress.

India-specific matters continued to figure among Walmart's lobbying issues even after this probe panel was set up.

During their testimony before the panel, the Walmart executives were lacking in sufficient details, on issues like specific expenses towards the lobbying activities.

Walmart is also believed to have told the panel that all its lobbying activities were done by the company's own employees and "advisors" and it did not engage third-party lobby firms.