Walmart Failed To Check Corrupt Practices In India Despite Red Flags, Says U.S. SEC
Walmart agreed to pay $287 million to settle a case involving corruption allegations to fast-track openings of stores globally.
Walmart Inc. on Friday agreed to pay $287 million in penalties to settle a case involving allegations of graft to fast-track openings of its stores in India, China, Mexico and Brazil, capping a seven-year-old investigation across the world.
The settlement, Bloomberg reported, was made to the U.S. Justice Department and Securities and Exchange Commission. A report by the U.S. market regulator said Walmart didn’t conduct inquiries despite audit reviews into the Indian subsidiary and joint venture identifying weaknesses in anti-corruption-related internal accounting controls that required remediation. The report also said the Arkansas-headquartered company continued to rely on the “India partner” for permitting, licensing and real estate matters for retail stores in India.
While the U.S. SEC report mentions only “India partner”, Walmart and Bharti Group had partnered for a wholesale retail venture in August 2007, which ended six years later.
“As a responsible corporate, we have always been and remain compliant with all regulations and the laws of the land. Since, we were neither involved nor aware of these proceedings, we would not be able to offer any comment.” a Bharti spokesperson said in response to an e-mailed query by BloombergQuint.
The U.S. SEC report also highlights Walmart didn’t act on an anonymous email sent to Walmart International’s executives, which alleged that employees of the India joint venture and retail business made improper payments to government officials to obtain store opening licences, and that a senior legal employee of the venture knew about it.
The U.S. retailer, the SEC report said, failed to implement internal accounting controls between 2009 and 2011. Its India joint venture, the report said, and retail ventures continued to retain “third-party intermediaries” that made improper payments to government officials to secure store opening permits.