India will appoint a retired judge to probe claims Wal-Mart Stores Inc. (WMT:US) broke rules as it lobbied to enter the country’s retail market, easing a tussle in parliament that had stalled proceedings.
The investigation will be a “time-bound” inquiry based on “media reports” into Wal-Mart’s activities, Parliamentary Affairs Minister Kamal Nath said today in the legislature. The company denies any wrongdoing.
Citing company disclosure filings before the U.S. Senate, the Press Trust of India said Dec. 9 that Wal-Mart spent as much as $25 million since 2008 on discussions regarding its foreign investments, including in the Indian retail industry. Opposition lawmakers, who last week lost parliamentary votes seeking to bar overseas supermarkets, have alleged part of the money was spent in India, where paid lobbying is not allowed.
“The allegation that a routine U.S. lobbying disclosure form reflects improper conduct on our part in India is false,” Wal-Mart said in an e-mailed statement today. “This disclosure has nothing to do with political or governmental contacts with India government officials.” The statement gave no estimate of Wal-Mart’s lobbying expenses.
Victoria Nuland, a U.S. State Department spokeswoman, said the report in question is part of a regular, federally mandated disclosure.
“We have no reason to believe there was any violation of U.S. law in this case,” Nuland said in an e-mailed statement yesterday.
Protests in both houses of India’s parliament over the issue ended today after two days of disruptions.
Parliament last week endorsed a September decision to allow foreign investment in retail stores selling more than one brand, the centerpiece of Prime Minister Manmohan Singh’s biggest embrace of foreign investment in a decade.
In votes in both houses of the legislature, the government defeated opposition parties led by the Bharatiya Janata Party, which argued that the move would put family-owned stores out of business. The win gave new life to a reform push unveiled as growth in the economy slowed to a three-year low.
A “report in the American Senate proves that Wal-Mart spent money in India to enter this country,” BJP leader Yashwant Sinha, said in parliament yesterday, demanding a quick judicial probe into the issue. “The country should know who were the beneficiaries of the money spent by Wal-Mart.”
Overseas companies including Wal-Mart, Tesco Plc (TSCO) and Carrefour SA (CA) will benefit from entering the world’s second-most populous nation, where retail sales are estimated to reach 47 trillion rupees ($863 billion) by 2017, according to a report by Associated Chambers of Commerce & Industry of India and Yes Bank Ltd. (YES)
“The Wal-Mart report has come in handy to the opposition to keep alive the issue after the victories of the government in parliament,” said Sandeep Shastri, a lecturer in politics a Jain University in Bangalore. “It’s a stick with which to beat the government.”
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