A US Government investigation is said to have found evidence of Wal-Mart Stores Inc allegedly paying ‘thousands of small bribes to local officials’ in India to get customs clearances and obtain real-estate permits, the Wall Street Journal reported on Monday.
Vast majority of payments were below $200 (about Rs13,000 at current exchange rate) and some were as low as $5 (Rs330) but together totalled millions of dollars.
The three-year federal probe “found evidence of bribery in India, centring on widespread but relatively small payments made to local officials there”, the Journal reported citing persons it didn't identify.
“Much of the suspected bribery investigators unearthed in India involves 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 $200, and some were as low as $5,” it said. “But when added together they totalled millions of dollars.”
The world's largest retailer entered India in 2007 through a supermarket joint venture with Bharti Enterprises but split up in 2013. Since then, it is mostly focused on wholesale business.
Wall Street Journal said investigators found similar payments in Mexico, but ‘the bulk of such activity seemed to be in India’. Wal-Mart is likely to face charges of violating the US Foreign Corrupt Practices Act due to these payments, the paper said, adding that the charges in India are unlikely to amount to a large fine as FCPA penalties are connected to profits the alleged misconduct generated.
“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 Rs232 crore in 2014. Its revenue had dropped 32 per cent to Rs2,992.7 crore in that year. In November last year, the retailer had sacked a manager following the probe by the US Department of Justice. Previously, it had sacked its CFO and legal team. 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 Rs232 crore in 2014. Its revenue had dropped 32 per cent to Rs2,992.7 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.