November 15, 2012 / 8:56 PM / 5 years ago

India to ask Wal-Mart for documents in investment probe -report

Nov 15 (Reuters) - 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.

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