Flipkart is under the internal investigation of Walmart, which is screening the asserted records of regulatory and internal compliance failures. The investigation is primarily focused to find the possible kickbacks paid by Flipkart to establish fulfilment centres (FCs) aka the logistics park across India, particularly in Bengaluru.
This curated investigation has significantly stalled the advancement of one of the Flipkart’s magnanimous drives.
Flipkart in Tough Clutches of Non-Compliance
By the March 2018, Flipkart proclaimed its plans to install a 100-acre logistics park near the prominence of Bengaluru city, the primary stage of which is supposed to be finished by June this year. The e-commerce behemoth’s purposes after the logistics park were to lessen the costs entailed by the lack of logistics and transport facilities, enhance supply-chain performances and speed up e-commerce delivery. The logistics park is planned to spread over a 45 lakh sq ft area and was sketched to be thoroughly integrated.
Flipkart had even demonstrated a deep-felt interest in the whole plan, by preparing to procure a space of 100 acres in the Doddaballapura Industrial Area, which is 31 km from the Kempegowda International Airport at Devanahalli, Bangalore. The company was also granted two different options by the Karnataka State Government – Channarayapatna village in Devanahalli and Masthenahalli village in Chikkaballapura. Despite, it expected an acknowledgement from the e-commerce behemoth.
“We showed Flipkart the land parcels five months ago, but they have still not reverted on the same,” said State government sources.
Just two months after this declaration, US retail giant, Walmart acquired Flipkart by buying for over $16 billion.
Walmart sprang up the Inquiry against The Allegations
Walmart has kept all the other projects alike to the Logistics Park in Bengaluru on hold till the regulatory slips are filed out shortly.
Evidently, the stipulations under which American companies operate are considerably stark. And Flipkart, not being furnished with the requisite licenses and grants, has spotted out an easy route to acquire them, by allegedly bribing the government officials.
Sources said, “This will make them liable under the FCPA (Foreign Corrupt Practices Act). Until these issues are sorted out, the logistics park project will be put on the back-burner and no new warehouses will be announced.”
Flipkart Denies Accusations
The entire magnanimous project of the logistics park in Bengaluru has been kept on hold. Upon inquiring about the lack of development in the project, Rajneesh Kumar, SVP & Chief Corporate Affairs Officer, Flipkart Group, opposed the news, stating that the project is, in action, and advancing at a stable speed. He also articulated about significant development in the logistics park within West Bengal.
Rajneesh Kumar also cited that, the sustained development and investment in infrastructure project will benefit the company by contributing to thousands of new sellers, including small artisans, MSMEs and new customers. He also emphasized on the fact that the project will also boost the local employment and elevation.
It is quite customary for Indian home-grown businesses to take on 30%-40% business risk rippling from non-adherence of regulations. In the case of stringent American companies like Walmart, however, compliance with FCPA and various anti-corruption laws is a fundamental priority that requires to be sorted out quickly, as stated by the senior General Counsel of a topmost private equity firm.
Considering all that Flipkart may have a tough time. While it may be little too early to conclude against or in the favour of Flipkart, the investigation against the Flipkart has already done the damages.
