Following a massive uproar in the Indian parliament Tuesday over U.S. retail giant Wal-Mart Stores Inc's (NYSE: WMT) disclosure of Capitol Hill lobbying activity pertaining to trade issues, including access to the Indian market, the Indian government has appointed a retired judge to probe the issue, Parliamentary Affairs Minister Kamal Nath announced in the Lok Sabha (the lower house of the Parliament) Wednesday.
The minister said that the enquiry would be time-bound and would include all issues pertaining to Walmart’s recent disclosure that it had spent $25 million on lobbying and other matters including gaining “enhanced market access for investment in India."
There were strong demands from the opposition members for a transparent enquiry into the issue, following a disclosure by Walmart in the U.S. that it had spent money on lobbying activities.
Members of the Indian Parliament voted last week approving a government decision to allow foreign direct investment in India’s retail sector. But things did not unfold smoothly after the voting exercise, as the government had to walk a tightrope on the issue with the opposition members and several of its own allies not favoring foreign investment in the retail sector stating that it would be detrimental to the livelihood of millions of small traders.
The issue threatened the very existence of the government as one of its key partners, Trinamool Congress, pulled out of the government over the issue.
Continue Reading Below
Citing media reports on Wal-Mart expenses on lobbying, opposition members alleged that the Indian government had been bribed by the retail giant’s lobbyists for opening up the country's $450 billion retail sector to foreign direct investment.
However, Wal-Mart denied the allegations claiming that its D.C.-based lobbying expenses, revealed in recent routine lobbying disclosure statements, were fees paid to consultants in the U.S. and were in accordance with the U.S. laws.
"This disclosure has nothing to do with political or governmental contacts with India government officials," a Bharti Walmart spokesperson said, Reuters has reported.
"It shows that our business interest in India was discussed with the U.S. government officials along with 50 or more other topics during a three-month period."
Wal-Mart is already facing another probe in India for alleged violation of foreign exchange norms in the country.
Walmart has been accused of “clandestinely and illegally" investing $100 million in India’s retail market through its wholesale joint venture partner Bharti Enterprises from 2010.
Walmart announced last month that the company was investigating allegations of corrupt practices in foreign markets, including India, as part of a worldwide review of its policies and practices to ensure compliance with the Foreign Corrupt Practices Act.