Walmart to apply US laws to Indian operations; wants anti-bribery undertaking from store owners
Walmart is demanding anti-bribery undertakings from landlords of its Indian stores along with rights to inspect their books, the latest blowback from its global anti-bribery campaign that has put an unflattering spotlight on its fledgling India operations.
Landlords are not only expected to certify that they have not paid any bribes while building the premises, but also give undertakings that give Bharti Walmart powers to periodically check their books and other documents, a person with direct knowledge of the situation told ET.
A second source confirmed such an exercise was underway, and noted that KPMG had been tasked with securing undertakings from landlords. A landlord of an Easyday store in the NCR said a Bharti Walmart executive had called him earlier this week to inform him about an anti-bribery agreement that landlords must sign as part of the Foreign Corruption Practices Act, or FCPA, a 1977 US law that bars American firms and individuals from bribing government officials in any foreign country wherever they are operating or working in.
Bharti Walmart has engaged KPMG to spearhead its anti-corruption campaign in India, and the consulting firm has undertaken programmes to sensitise employees about FCPA. It is also tasked with certifying vendors that are fit to do business with the retailer.
Asked about the undertakings from landlords, Bharti Walmart said it was implementing a "number of specific, concrete actions to strengthen our compliance programme in India".
"We take compliance with FCPA very seriously," a Bharti Walmart spokesperson said in an emailed reply to a list of questions from ET.
DIFFICULT FOR DEVELOPERS
We are committed to having a strong and effective global compliance programme in every country in which we operate. We are working diligently to strengthen our compliance programmes and dedicating considerable resources to this effort," the spokesperson said.
While such action could help limit Walmart's liability in case misdemeanors come to light in the future, the US firm's latest demands are unlikely to go down too well with its property partners, most of whom could find it hard to give such undertakings because of the nature of doing business in India.
Developers have to obtain more than a dozen approvals from assorted government offices before building and operating malls in India.
These range from design and usage of the property to fire and safety clearances to environmental approvals, many of which are provided by agencies and departments that many view as hotbeds of corruption