Walmart and Bharti Enterprises have suspended the chief financial officer and other staff belonging to their joint venture in India pending the outcome of an investigation into a bribery charge.
The development is expected to delay the entry of Walmart into the Indian multi-brand retail market.
"We are committed to conducting a complete and thorough investigation. Walmart and Bharti have suspended a few associates pending the outcome of the investigation," a spokeswoman for Bharti Walmart Pvt. Ltd. said in an emailed response to the queries by the Dow Jones Newswires.
Two weeks ago, Walmart announced an investigation into alleged violations of U.S. anti-bribery laws by its India, China, Brazil and Mexico units.
"We have inquiries or investigations regarding allegations of potential FCPA [Foreign Corrupt Practices Act] violations in a number of foreign markets where we operate regarding FCPA allegations, including but not limited to Brazil, China and India. This is in addition to the ongoing investigation in Mexico," the company said in a statement on its website.
A company official, who refused to be named, told Reuters that such suspensions were a routine practice globally to ensure fairness in investigations.
"The suspension is a routine global practice followed in such investigations. We cannot carry out a fair investigation when the people we are investigating are in office. What we must not forget is they are innocent until proven guilty," the official at the Indian unit said.
Meanwhile, the authorities in India have started a probe into the alleged violation of the foreign exchange rules in the country by Walmart. They launched the probe on a complaint by a lawmaker who alleged that the U.S. retail giant invested in the domestic front-end units of Bharti Enterprises by violating the Foreign Exchange Management Act.
Both developments have strengthened protests in India against FDI, or foreign direct investment, in retail and would delay the U.S. retail giant’s planned entry into multi-billion Indian retail market.
Foreign direct investment in retail is opposed by the leftist and opposition parties in the country, though the government has gone ahead with a reform measure to revive the economic growth, which touched a nine-year-low in the last quarter.
The first day of the Indian parliament’s winter session on Thursday was disrupted as the angry opposition protested against the reform bill and demanded a debate and voting on the issue.