The commission will be headed by a retired Supreme Court or High Court judge. The terms of reference include probe into recent media reports regarding their lobbying activities and whether Wal-Mart undertook any activity in India in contravention of any Indian law, an official said.
Wal-Mart has consistently denied involvement in any wrongdoing.
The commission will also inquire into reports of Wal-Mart spending $25 million (R125 crore) towards lobbying activities in India since 2008 and whether these breached Indian laws. The commission will submit its findings within 90 days of its constitution.
The Cabinet note to this effect was circulated for inter-ministerial consultations recently by the corporate affairs ministry. Corporate affairs minister Sachin Pilot said on Thursday that his ministry was in the process of setting up the commission.
The move comes over a month after the Parliaments Winter session where opposition parties disrupted proceedings alleging wrongdoings by Wal-Mart and wanted to know who were paid the reported amount of R125 crore mentioned by the company before the US Congress.
It was in November last year when Bharti Walmart, a 50:50 joint venture of Wal-Mart and Bharti Enterprises, that operates 18 wholesale stores in India, said that it had suspended five of its executives, including the chief finance officer pending the outcome of its inquiry.
Wal-Mart had said at the time that its internal inquiry will be to gauge potential violations of the US Foreign Corrupt Practices Act.
However, as soon as media reports were out in India regarding the disclosures of Wal-Marts lobbying spends, the US administration defended the global retail giant stating there were no violations by the company according to the US laws. On the US side, I dont have any reason to believe that we have a violation of US law here. With regard to the Indian side, Ill refer you to them, state department spokesperson Victoria Nuland had said on December 11, 2012, categorically dismissing allegations by Indian opposition parties in this regard.
According to the US official, the Lobby Disclosure Act of 1995 and the Honest Leadership and Open Government Act of 2007 requires lobbyists for any company or organisation to disclose its activities in a periodic report to Congress.
Meanwhile, Wal-Mart chief executive Doug McMillon told commerce industry and textile minister Anand Sharma in Davos on Thursday that Wal-Mart was excited about India.
McMillon, who is the CEO of Wal-Mart International, told Sharma that the company is studying the conditions before making the final announcement of expanding its pressence in the multi-brand retail sector in India, an official statement issued by the government said on Thursday.
On his part, Sharma said that Indias Policy on FDI in multi-brand retail has finality and they need not be unduly concerned about any policy reversal. Sharma also asked them to send request for clarification, if any, in the written form to his ministry. All necessary clarity will be provided, Sharma assured McMillon.