Nov 15 The Indian government will ask Wal-Mart
Stores Inc to turn over some documents as part of a
probe into whether the U.S. retailer violated foreign ownership
rules, the Press Trust of India reported late on Thursday.
A Communist Party lawmaker has accused Wal-Mart of
"clandestinely and illegally" investing $100 million in the
multi-brand retail business of its wholesale joint venture
partner, Bharti Enterprises, as early as 2010, before India
allowed foreign companies to operate front-end stores.
A Wal-Mart spokesman, Kevin Gardner, told Reuters that the
retailer is in compliance with Indian law. "The Central
Government has sought certain information and clarification
which has been provided by us," he said.
"We are not in a position to offer further comments as the
matter is before the courts."
According to the newspaper report, India's Enforcement
Directorate, a federal investigative agency, will formally
notify Wal-Mart to hand over documents related to investments
and payments to its Indian partner as part of the probe into
whether it violated foreign ownership rules.
India's central bank advised the Enforcement Directorate to
probe the investments for possible violations of the Foreign
Exchange Management Act, the newspaper said, quoting an unnamed
source close to the matter.
India recently allowed foreign retailers to own up to 51
percent in supermarkets, a decision made in the face of fierce
political opposition. Previously, Wal-Mart and other foreign
players were only allowed to own wholesale operations.
Wal-Mart was the most vocal advocate for the rule change and
is expected to open its first retail store within 18 months.
Enforcement Directorate officials could not immediately be
reached for comment.