Walmart Agrees To A $282 Mn Settlement In US Over Its Overseas Trade Practices Including In India

US retail giant Walmart said it has agreed to pay over $282 Mn as part of its settlement with a US regulator over charges of violating anti-corruption regulations while conducting its business in India, China, Brazil and Mexico.

The Amazon rival was charged by the US Security and Exchange Commission (SEC) for violating the Foreign Corrupt Practices Act (FCPA) by failing to operate a sufficient anti-corruption compliance programme for more than a decade as its business grew along with its rising influence in retail markets around the globe.

According to the SEC, Walmart agreed to pay more than $144 Mn to settle the SEC’s charges and approximately $138 Mn to resolve parallel criminal charges by the Department of Justice for a combined total of more than $ 282 Mn.

The SEC said these violations were conducted by Walmart’s third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the FCPA.

According to the SEC’s order, Walmart failed to sufficiently investigate or mitigate certain anti-corruption risks and allowed subsidiaries in Brazil, China, India, and Mexico to employ third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the FCPA.

“We’re pleased to resolve this matter, Walmart is committed to doing business the right way, and that means acting ethically everywhere we operate. We’ve enhanced our policies, procedures and systems and invested tremendous resources globally into ethics and compliance, and now have a strong Global Anti-Corruption Compliance Program. We want to be the most trusted retailer, and a key to this is maintaining our culture of integrity,” Walmart president and CEO, Doug McMillon, said in a statement.

In the US SEC order, the regulator detailed  several instances when Walmart planned to implement proper compliance and training only to put those plans on hold or otherwise allow deficient internal accounting controls to persist even in the face of red flags and corruption allegations.

Closer To Home, Flipkart Under Scanner 

Walmart, which bought India’s top ecommerce player Flipkart last year,  has reportedly started a country-wide investigation into Flipkart’s India units over charges of corruption in setting up of Flipkart fulfilment centres.

According to a report, Walmart realised that Flipkart warehouses do not have the necessary permits, and in some cases, government officials have been paid off to get them. The investigation is also reportedly the reason for the delay in the launch of Flipkart’s 100-acre state-of-the-art logistics park in Bengaluru, which was announced in March 2018.

The report went on to predict that could make them will make them liable under the FCPA and that until these issues were sorted , the logistics park project will be put on the back-burner and no new warehouses would be announced.

However, a Flipkart spokesperson denied the report and said in a statement to Inc42, “There is no investigation whatsoever being done with regards to fulfilment centres. We’re proceeding as per the plan and satisfied with the progress on the site selection process. In fact we’re advancing well on our other large logistics hubs too in West Bengal as well in NCR. The infrastructure that we’re building across the country through these warehouses and logistics park will help us bring next 200 Mn customers to experience ecommerce and also support thousands of new sellers across the country.”

However, US SEC’s order covers the period, in India’s case, between 2009-2011 when Walmart had a joint venture with Bharti Enterprises to operate wholesale cash and carry stores with an eye on operating retail stores. The  joint venture ended in 2013 as the government never allowed foreign direct investment in multi brand retail.

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