Walmart to pay $283 mn fine in US over bribery charges in India, other countries
2 min read 21 Jun 2019, 09:09 AM ISTThe investigations pertained to Walmart’s operations prior to 2011Investigation concluded that Walmart allegedly allowed subsidiaries in Brazil, China, India and Mexico to employ third-party intermediaries who paid government officials
PremiumNEW DELHI : New Delhi: Walmart has pleaded guilty in a seven-year-long case that accused the world’s largest retailer of bribing officials in four countries -- India, China, Mexico and Brazil -- to secure permits for its businesses. The Arkansas-based retailer will pay $282.7 million in fines to settle the case with the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC).
The penalty includes $137.96 million to be paid to the DOJ and $144.69 million in disgorgement of profits plus interest to the SEC. The investigations pertained to Walmart’s operations prior to 2011.
The period in question in India’s case – 2009-2011 -- refers to the time when Walmart had a joint venture with Bharti Enterprises to operate wholesale cash and carry stores with an eye on operating retail stores in future. The five-year-old joint venture ended in 2013 as the government never allowed foreign direct investment in multi brand retail and the wholesale business floundered.
The investigations found serious lapses in the company’s internal controls which were in violation of the US Foreign Corrupt Practices Act.
“In numerous instances, senior Walmart employees knew of failures of its anti-corruption-related internal controls involving foreign subsidiaries, and yet Walmart failed for years to implement sufficient controls comporting with U.S. criminal laws," A DOJ release quoted Assistant Attorney General Benczkowski as saying.
The improper payments were falsely recorded in Walmart’s joint venture’s books and records with vague descriptions like “misc fees," “miscellaneous," “professional fees," “incidental" and “government fee."
The release pointed out that because of Walmart’s failure to implement sufficient internal accounting controls related to anti-corruption, from 2009 until 2011, Walmart’s operations in India were able to retain third party intermediaries that made improper payments to government officials in order to obtain store operating permits and licenses.
The company, in a statement posted on its website, said it had since established a strong global anti-corruption compliance programme.
The world’s largest retailer currently operates 23 wholesale stores in India which has allowed full foreign ownership of such outlets. A PTI news report had in October quoted Walmart India Chief Executive Officer Krish Iyer as saying that the company planned to have another 43 stores in India by 2022.
Last year, Walmart bought a 77% stake in online retailer, Flipkart, for $16 billion, valuing India’s most valuable consumer internet start-up at $21 billion.
As part of the resolution, Walmart entered into a non-prosecution agreement with the DOJ. The DOJ will not prosecute the company if, for a period of three years, the company meets its obligations set forth in the agreement.
