NEW DELHI — Wal-Mart Stores Inc.’s lobbying spending in the U.S. has stirred controversy in the Indian Parliament.
This story first appeared in the December 12, 2012 issue of WWD. Subscribe Today.
Following a disclosure to the U.S. Senate by Wal-Mart that the company spent $25 million in lobbying since 2008, the Indian opposition parties that have been fighting the idea of global retailers entering the market — with Wal-Mart epitomizing that — have put the world’s largest retailer under the spotlight.
The report is said to have mentioned that some $3 million was spent on “enhanced market access for investment in India.”
Also causing concern and argument in Parliament were the results of the last quarter, which ended Sept. 30, that showed Wal-Mart had spent $1.65 million on various lobbying issues, including “discussions related to foreign direct investment in India.”
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“This raises a question mark on the implementation of FDI in retail,” said Ravi Shankar Prasad, Bharatiya Janata Party leader in Parliament, referring to Wal-Mart’s alleged lobbying in India.
With the political parties just having concluded a raucous and difficult week, ending Dec. 7 when the matter of FDI in multibrand retail was put to the test with a debate and a vote in both houses of Parliament, opposition parties countered the winning vote in favor of FDI in multibrand retail by alleging that the ruling United Progressive Alliance had “sold out to foreign interests.”
On Monday and Tuesday, Parliament focused on Wal-Mart, which has been eager to enter the Indian market on its own. The opposing BJP called for a judicial probe into the retailer’s lobbying spending.
“The government views this with as much concern as all sections of the house and has no hesitation in having an inquiry to get to the facts of the matter,” Kamal Nath, Parliamentary Affairs Minister, said Tuesday.
It is expected that consultations between key ruling party members on Wednesday will lead to a clearer positioning on the issue.
Wal-Mart said, “These allegations are entirely false. In accordance with U.S. law, U.S. companies are required to disclose the issues and expenditures associated with lobbying on a quarterly basis. The expenditures are a compilation of expenses associated with U.S. federal lobbying contacts and include staffing cost, association dues, and payments made to consultants, all in the United States. Our Washington office naturally had discussions with U.S. government officials about a range of trade and investment issues that impact our businesses in the U.S. and worldwide, and disclosed this in accordance with the law.”
Rajesh Joshi, a corporate lawyer, said that the real issue was that although “lobbying” is legal in the U.S., it is illegal in India and often is not easily distinguished from corruption. “Many Indians view it as greasing the pockets of a person who makes decisions,” he said.
Wal-Mart already has a 50-50 joint venture with Bharti Enterprises, which started in 2008, for a cash-and-carry format that has 18 stores. Many of these are in smaller cities such as Vijayawada and Guntur. The joint venture already is under scrutiny, with its chief financial officer Pankaj Madan and four other officials being investigated over charges of corruption.