India investigates Wal-Mart over stake in local unit
Arkansas-based Wal-Mart has repeatedly denied the allegations. The central government has sought certain information and clarification, which has been provided by us. We are not in a position to offer further comments as the matter is before the courts, a Wal-Mart spokesman said on Friday.
India liberalised its retail sector in mid-September to allow global superstores to buy stakes in Indian companies - one of a number of big-ticket reforms passed in September by Prime Minister Manmohan Singh to revive a sluggish economy. Previously, foreign retailers were only allowed to invest in wholesale operations.
HEADACHE FOR WORLD'S LARGEST RETAILER
Wal-Mart was the most vocal advocate for the change and has said it expects to open its first retail store within 18 months.
M.P. Achuthan, a member of the Communist Party of India that opposes foreign direct investment in retail, accused Wal-Mart of investing $100 million as early as early 2010 in a multibrand retail business.
In September, Achuthan raised the issue in parliament, questioning Wal-Mart's role in Easyday stores, which are controlled by Bharti Enterprises, its partner in a wholesale joint venture.
India's commerce minister answered that Wal-Mart, via its Mauritius arm, held debentures that are convertible into a 49 percent equity stake in Cedar Support Services, the company previously known as Bharti Retail Holdings that holds Easyday.
The law enforcement official confirmed that the Enforcement Directorate was looking at Cedar.
The main part of this investigation will be whether they (Wal-Mart) offered a credit line. They have
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