India launches probe into Wal-Mart lobbying report

NEW DELHI Wed Dec 12, 2012 12:04pm EST

A municipal worker pours water on saplings near to a newly opened Bharti Wal-Mart Best Price Modern wholesale store in the southern Indian city of Hyderabad September 26, 2012. REUTERS/Krishnendu Halder

A municipal worker pours water on saplings near to a newly opened Bharti Wal-Mart Best Price Modern wholesale store in the southern Indian city of Hyderabad September 26, 2012.

Credit: Reuters/Krishnendu Halder

NEW DELHI (Reuters) - India's government announced an inquiry into lobbying practices by Wal-Mart Stores Inc (WMT.N) on Wednesday after a report that the giant retailer had pressed U.S. lawmakers to help gain access to foreign markets.

Wal-Mart disclosed in a report to the U.S. Senate it had paid $25 million over four years to lobby American lawmakers, in part to help gain access to overseas markets including India.

The report spurred opposition lawmakers, who oppose Wal-Mart'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.

Parliamentary Affairs Minister Kamal Nath told parliament that a retired judge would be appointed to lead an investigation "pertaining to Wal-Mart's lobbying."

No further details were available about the inquiry.

Government officials have said privately there is nothing to investigate since Wal-Mart's lobbying activities in the United States were not illegal.

Wal-Mart has labeled as false allegations that a routine U.S. lobbying disclosure form reflected improper conduct on their part in India.

"This disclosure has nothing to do with political or governmental contacts with India government officials," said a Bharti Walmart spokesperson.

"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."

In its filing with the U.S. government, Wal-Mart lists several topics of domestic and foreign trade discussed in its lobbying effort, including supply chain security issues, investments overseas and Walmart exports. One of the topics it discussed was foreign direct investment in India.

All organizations that spend more than $11,500 annually on lobbying activities and employ at least one lobbyist must register and file the quarterly reports, the spokesperson added.

The government wants to resolve the matter as quickly as possible so that parliament can pass important financial bills before the winter session ends on December 20.

Wal-Mart has found itself entangled in a fight between Prime Minister Manmohan Singh's fragile minority government and political opponents determined to thwart supermarket reform which, they say, will destroy the livelihoods of millions of small store owners.

Opposition parties have sought to portray Singh's government as the pawn of powerful foreign companies ahead of national elections due in 2014.

Bentonville, Arkansas-based Wal-Mart has been the most active among foreign supermarket operators keen to push their way into India's huge retail market.

Shares of Wal-Mart were down 2.5 percent to $69.12 in midday trading on Wednesday on the New York Stock Exchange.

(Reporting by Nandita Bose, Satarupa Bhattacharjya and Nigam Prusty; Editing by Ross Colvin, Jeremy Laurence and Jeffrey Benkoe)