MUMBAI, India – Wal-Mart’s Indian joint venture said Friday it had suspended several employees as part of an internal corruption investigation, another blow to the U.S. company’s plans for aggressive expansion in a giant market that is largely untapped by foreign retailers.
Bharti Walmart, Wal-Mart’s joint venture with India’s Bharti Enterprises, said it had suspended a few associates and was committed to conducting a complete and thorough investigation. India’s Economic Times newspaper reported that the company’s chief financial officer was among the five employees suspended, a claim the company declined to verify.
The news comes at a sensitive time for foreign retailers in India, where corruption scandals in everything from telecommunications to coal mining have badly damaged the ruling Congress Party. Eager to rekindle foreign investment, the Congress Party eased foreign investment rules in September, paving the way for Wal-Mart and others – which had been limited to wholesaling – to run retail shops with a local partner.
When parliament reconvened this week, opposition politicians shut down proceedings to protest the move, which has already cost the Congress Party a key partner.
In a Nov. 15 filing to the U.S. Securities and Exchange Commission, Wal-Mart said it was investigating potential violations of the U.S. Foreign Corrupt Practices Act in Brazil, China and India, among other markets. Wal-Mart’s Mexico subsidiary is already embroiled in a public scandal over alleged payments to middlemen to speed up the store-opening process, possibly through payments to local officials.