THE entry of Walmart, the world’s biggest retailer into India, has stirred up a hornet’s nest, with allegations flying thick and fast of bribery and massive payoffs to lawmakers in exchange for an entry into the lucrative Indian market. The retail giant’s entry into the country comes amid allegations that it bribed Indian legislators to the tune of $25 million to facilitate its entry into what it calls the ‘last frontier’. In a report to the US Senate Walmart disclosed it had paid $25 million over four years to lobby US lawmakers, among other things, for an entry into overseas markets including India.
The larger picture pertaining to India is the contentious issue of allowing foreign direct investment (FDI) in multi-brand retail, which many feel, would sound the death knell for the small corner shops in the country, where the majority purchase their wares. The Delhi government has decided to organize a meeting which would decide if it will become the first state in the country to allow FDI after the same was passed in both houses of Parliament.
The American government has backed Walmart to the hilt, which has lobbied furiously to find an ingress into the Indian market, where just 3 per cent of consumers have access to large Western-style stores; in China, that figure is 20 per cent, 30 per cent in Indonesia and 40 per cent in Thailand.
Meanwhile, the news that Walmart bribed certain political leaders here has led to the opposition parties turning the heat on the embattled UPA government, already reeling from a plethora of corruption scandals. The BJP, the CPI, Trinamool Congress, BJD and AIADMK have demanded an independent inquiry into these allegations and have pressed for the names of Indian ‘beneficiaries’ to be made public. Senior BJP leader Yashwant Sinha has called for the probe to be completed within sixty days. Parliamentary Affairs Minister Kamal Nath claimed that the government will appoint a retired judge to hold an inquiry into media reports concerning Walmart.
A few days ago Bharti Walmart Ltd, the joint venture company of Walmart and Bharti Enterprise Ltd, suspended five of its employees on charges of bribery for allegedly violating the US Foreign Corrupt Practices Act. Though it is futile to expect any concrete action from the tainted, scam-ridden UPA government, the reality is that Walmart is here to stay, though how it impacts the spending pattern of the Indian consumer remains to be seen. The Indian government is hoping for a speedy end to the matter as quickly as possible so that Parliament can pass important financial bills before the winter session ends on December 20.
In a report, Reuters said that ‘the report spurred opposition lawmakers, who oppose Walmart’s entry into India, to call for an inquiry into whether any money was spent there, even though the disclosure filing only referred to lobbying activities in the United States. Walmart has labeled as false allegations that a routine U.S. lobbying disclosure form reflected improper conduct on their part in India’. Lobbying maybe legal in the United States but it is illegal in India.
A Bharti Walmart spokesperson said that the ‘disclosure has nothing to do with political or governmental contacts with India government officials. It shows that our business interest in India was discussed with U.S. government officials along with 50 or more other topics during a three-month period’. Among the national and foreign trade topics covered in its lobbying effort in its filing with the U.S. government, Walmart lists supply chain security issues, investments overseas and Walmart exports. One issue related to foreign direct investment in India.
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Walmart in the line of fire in Mexico
WITH its enormous financial clout, the firm has already received flak for numerous allegations of underhand dealings across Mexico, Brazil and China. According to a report in The Huffington Post, in 2005 a former lawyer with Walmart de Mexico contacted corporate headquarters in Bentonville, Arkansas, claiming that the unit’s spectacular growth had been facilitated by widespread bribery. A preliminary internal investigation found evidence that Walmart de Mexico had paid over $24 million to public officials and governments throughout the country to expedite building permits to gain a competitive advantage over rivals. Presented with a report detailing the illegal payoffs, Walmart’s senior managers rejected the investigators’ call for a full inquiry. Instead, they turned the investigation over to Walmart de Mexico’s general counsel, a man the whistleblower had named as a key figure in the conspiracy who promptly closed the case.
