ED begins Walmart funding probe

The Centre on Wednesday told the high court that the enforcement directorate (ED) was investigating the alleged investment of American retail giant Walmart in Indian companies, in violation of the provisions of the Foreign Exchange Management Act.

Petitioner T Vellayan, president of Federation of Tamil Nadu Traders Association, had sought a direction to authorities to examine, investigate, or consider investment by a subsidiary of Walmart in two Indian firms in March-April 2010.

When the matter came up, the Additional Solicitor General said the Reserve Bank of India had referred the matter to the ED and the ED was now seized of the matter and as such, the prayer had become infructuous.

Defence counsel B Kumar stated that it was only a routine procedure and no inquiry was ordered by the government. He said it was only because of filing of the petition, the RBI initiated action and in case the plea is closed, the authorities would close the matter.

Counsel for the private firms contended that the petitioner had no locus standi in the issue.

A Division Bench comprising Justices R Banumathi and K K Sasidharan said the RBI's letter dated November 2,

clearly indicated that the RBI had taken cognisance of the petition and another one filed against the FDI policy.

It said the Additional Solicitor General had submitted that the ED was seriously looking into the matter and conducting detailed investigation.

The bench said it was only directing the ASG to take instructions from the ED with regard to action taken pursuant to the letter sent by the RBI and the stage of investigation.

The matter was posted for January 31 next.

The PIL submitted the Union government had allowed FDI in multi-brand retail on 14 September before which it had been prohibited under Foreign Exchange Management Act, 1999, and Foreign Exchange Management (Transfer or Issue of Security by a person resident outside India) Regulations 2000.

It said in March and April this year, Wal Mart Stores Inc, USA through its subsidiary, in collusion with two Indian firms, illegally invested Rs 455.80 crore (Rs 4.55 billion) in multi-brand retail in India by masquerading it as for 'Services Sector.'