MUMBAI (Reuters) - Wal-Mart Stores Inc (WMT.N) violated Indian rules governing foreign investment, the country’s top police agency said in a letter to a member of parliament seen by Reuters.
The Central Bureau of Investigation (CBI) said in the letter that according to its analysis, Wal-Mart’s investment violated Reserve Bank of India guidelines and Foreign Exchange Management Act regulations.
However, it said violation of FEMA regulations does not fall under its remit, so it could not investigate the matter.
Wal-Mart, the world’s largest retailer, has been investigated for putting money into a retailer before the government opened the sector to global players in September 2012. It entered India in 2010 with a $100 million investment in a consultancy, Cedar Support Services, which was a retailer when it began its corporate life.
Wal-Mart has denied breaking investment rules and said on Friday it had cooperated with the government during the investigation.
Its entry into Asia’s third-largest economy has been slowed by several issues, including an internal bribery probe and still-evolving rules governing the retail sector.
The CBI sent the letter to M.P. Achuthan, a communist member of parliament, who in September had accused Wal-Mart of breaking entry rules.
At the time, the Indian government asked its Enforcement Directorate, which investigates financial crimes, to look into the case. The Enforcement Directorate has not announced any decision and on Friday could not be reached for comment.
A CBI spokeswoman did not provide further details.
“After nine months of the case not moving ahead at the Enforcement Directorate, I wrote to the CBI and asked them to intervene and investigate and they have found violations,” Achuthan told Reuters.
“This certainly takes the investigation forward and now the ED should act quickly,” he said.
Senior government officials told Reuters last November that if Wal-Mart was found to have broken the law, it could face a penalty of up to three times its initial $100 million investment.
Editing by Tony Munroe and David Holmes