Bharti Walmart Under Fire, Takes CFO’s Scalp. Firebrand Uma Bharti wants Bharti Walmart to Shut Down. What Next?

Bharti Walmart has suspended five people, including CFO Pankaj Madan, as part of an ongoing global investigation by the US retail giant against alleged corrupt practices, sources said. It is understood that more heads may roll as the investigation progresses in the coming days in the company, which has now decided to put a halt to opening new cash and carry wholesale stores in India pending the probe.

Reacting to foreign direct investment (FDI) in retail, Bharatiya Janata Party (BJP) leader Uma Bharti Friday threatened to burn down Wal-Mart outlets if they are established in India.

“I am very angry by the fact that it was big companies that took away lands from the poor first and now the big companies would also take away employment from the poor people,” Bharti told reporters.

“If Wal-Mart attempts to open any shop anywhere, then I will personally burn them down. I am ready to be arrested for that,” she added.

Bharti went on to say: “By giving permission to Wal-Mart to directly invest in the retail sector, the Centre has killed the employment opportunities of Dalits, poor and backwards. If Rahul Gandhi (Congress general secretary) is really concerned about the plight of the poor, why is he not asking the Prime Minister to stop Wal-Mart’s entry in India?” the saffron leader asked.

Meanwhile, Communist Party of India (CPI) leader Gurudas Dasgupta said that being a Member of Parliament, Uma Bharti could not utter such words unless she had turned ‘lunatic or senile’. “Either senile or lunatic person can speak like this,” he told media.

Proceedings in the Parliament were disrupted Friday by the Opposition over the Central Government’s decision to allow foreign direct investment (FDI) in its closely-guarded multi-brand retail market, resulting in the adjournment of both the houses till Monday afternoon.

Thursday, India decided to allow foreign direct investment (FDI) in its closely-guarded multi brand retail market, paving the way for global supermarket giants to step into the $450 billion sector that was widely seen as one of the last frontier markets.

After years of dithering, India’s cabinet cleared 51 percent FDI in multi-brand retail, allowing global retail giants like Wal-Mart, TESCO and Carrefour to inject sorely needed investment in Asia’s third-largest economy.

The cabinet Thursday cleared 100 percent FDI in single-brand retail.

The Reserve bank of India has already asked the Enforcement Directorate (ED) to probe Walmart’s investment in an arm of Bharti enterprises, Cedar Support Services Ltd , for alleged violations of forex laws. Bharti Enterprises has, however, rejected the allegations that it had violated any rule in this regard. The company had said all the procedures were as per the “law of the land

Confirming the suspension, a Bharti Walmart spokesperson said:” We are committed to conducting a complete and thorough investigation. It would be inappropriate for us to comment further until we have finished the investigation.”

Mr Madan and four of the five-member legal team of Bharti Walmart were suspended on Tuesday as part of the ongoing investigation over allegations of corrupt practices against the company in foreign markets, including India, a source said.

On whether the company has decided to put on hold store expansion till the probe completed, the spokesperson said: “We are committed to the Indian market. We remain excited about the opportunity to grow our business in one of the world’s most vibrant economies, expand opportunities for farmers and help lower the cost of living for families in India.”

Bharti Walmart is a 50:50 joint venture between Bharti Group and Walmart stores Inc for running of wholesale stores under the Best Price Modern Wholesale brand. Last week Walmart had said it was investigating allegations of violation of Foreign Corrupt Practices Act (FCPA) of the US, that bars bribing officials of foreign governments, in India and other countries including China and Brazil.

A worker arranges oranges at a Bharti Wal-Mart Best Price Modern wholesale store at Zirakpur in Punjab November 16, 2012

The Indian joint venture of Wal-Mart Stores Inc has suspended its chief financial officer and other employees as it investigates alleged violations of U.S. anti-bribery laws, a development that could hamper India’s efforts to open its domestic supermarket sector to foreign investment.

Wal-Mart, the world’s largest retailer, said last week it has opened internal inquiries or investigations into bribery allegations in Brazil, China and India, which follows an earlier probe in Mexico.

“The suspension is a routine global practice followed in such investigations,” an official at the Indian unit said, declining to be named. “We cannot carry out a fair investigation when the people we are investigating are in office. What we must not forget is they are innocent until proven guilty,” the person said.

Separately, a spokeswoman for the joint venture confirmed the suspensions and said the venture was “committed to conducting a complete and thorough investigation.” Wal-Mart’s partner in the venture is Bharti Enterprises.

Indian authorities are also investigating claims that Wal-Mart violated foreign exchange rules when it invested $100 million in a domestic unit owned by its wholesale joint-venture partner.

Indian opposition parties and allies within the Congress party-led coalition government in New Delhi are opposed to allowing global giants like Wal-Mart into the retail sector, saying to do so would drive small traders out of business.

After several delays, the government in September finally allowed foreign direct investment in the sector to revive stalled reforms and help halt a slide in economic growth.

On Thursday, when the Indian parliament opened for its winter session, opposition politicians demanded a debate and vote on the policy decision and have threatened to halt parliamentary proceedings.

“We have inquiries or investigations regarding allegations of potential FCPA violations in a number of foreign markets where we operate, including but not limited to Brazil, China and India. This is in addition to the ongoing investigation in Mexico,” the company had said.

 

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