Bharti-Walmart faces more heat in probe

At a time when top Cabinet ministers are on official trip to the US and queries on foreign direct investment (FDI) will form key part of their interaction with the American officials, the heat is increasing on Bharti-Walmart-the Indian arm of the global retail giant Walmart-which is being investigated for Foreign Exchange Management Act (Fema) violation by the Enforcement Directorate (ED).

Mail Today has accessed a series of notes on the investigation that include a letter written by the Reserve Bank of India (RBI) to the ED on the investigation on June 28 asking "ED to reexamine the case and take necessary action as per Fema regultions" as it has noticed certain irregularities. ED had written to RBI on May 2 seeking directions as the Central bank has to man-date the penalties if it finds a prima facie case under Fema.

RBI has told the ED that Bharti Ventures Ltd invested funds in Cedar Support Services Ltd (CSSL), which in turn invested the amount in Bharti Retail Ltd (BRL) and Bharti-Walmart Pvt Ltd. It is not clear whether Bharti Ventures-an investment-cum-holding company-has got FDI directly or indirectly.

Walmart's spokesperson told Mail Today, "We are in compliance with India's FDI guidelines, and as we have stated, we have cooperated with the government during this process."RBI has asked the ED to further probe whether investment by CSSL in BRL is violation of FDI rules. RBI has also said that violation of multi-brand retail trading cannot be compounded by the bank since it was a prohibited sector prior to September 2009. Even after that date, it is only permissible subject to certain conditions.

Courtesy: Mail Today