America's multinational retail corporation Wal-Mart paid millions of dollars in bribes in India: Report

WASHINGTON: The world's largest retailer Wal-Mart made "suspicious payments" towards "thousands of small bribes" totalling millions of dollars to local officials in India, according to a media report.
The Wall Street Journal said in a report that Wal-Mart's "suspected bribery" unearthed in India involved thousands of small payments to low-level local officials to help move goods through customs or obtain real-estate permits.

"The vast majority of the suspicious payments were less than USD 200, and some were as low as USD 5, the people said, but when added together they totalled millions of dollars," the daily said.

According to the report, federal investigators "found evidence of bribery in India, centering on widespread but relatively small payments made to local officials there" during the course of its "high-profile federal probe" into allegations of widespread corruption at Wal-Mart Stores Inc's operations in Mexico.

When contacted, Wal-Mart India Vice President and Head - Corporate Affairs - Rajneesh Kumar said: "As we have said from the beginning, we are cooperating fully with the government in this matter and can't comment further on that process."

He further said that compliance with the US Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws is key priority for Wal-Mart.

"We work closely with third-party compliance experts on support and training as we continuously review and strengthen our programs around the world," Kumar added.

In Nov 2012, the company's erstwhile joint venture Bharti Wal-Mart had suspended five people, including the then CFO Pankaj Madan, as part of an ongoing global investigation by the US retail giant against alleged corrupt practices in India.

The world's largest retailer, which entered India in 2007 through a supermarket joint venture with Bharti Enterprises, parted ways with the Indian partner in 2013, and shelved plans to open retail stores in the country and instead decided to become solely a wholesaler.

The investigations in India were part of a probe that included Wal-mart's operations in Mexico, China and Brazil, over allegations of violation of FCPA of the US, that bars bribing officials of foreign governments.

According to the report, Wal-Mart's massive bribery efforts is unlikely to bring in any penalty on it under the provisions of the FCPA of the US, as the company's Indian operation does not yield any profit.

"Because penalties under the FCPA are often connected to the amount of profit the alleged misconduct generated, the payments in India wouldn't be likely to result in any sizable penalty, since Wal-Mart's operations there haven't been particularly profitable," it cited people familiar with the matter as saying.

Wal-Mart's Indian unit reportedly had suffered a loss of Rs 232 crore in 2014. Its revenue had dropped 32 per cent to Rs 2,992.7 crore in that year.

Wal-Mart, which was pushing the previous UPA regime in India for opening of the multi-brand retail sector was also involved in lobbying before the US Congress in this regard, Congressional disclosure reports have said in the past few years.

The investigations though have found little in the way of major offences in Mexico, and is likely to result in a much smaller case than investigators first expected, the daily said.