India may order investigation into Wal-Mart lobbying expenditure

India may conduct an investigation into money spent on lobbying by Wal-Mart Stores Inc. in its bid to enter the country’s retail market, as opposition lawmakers stalled parliament demanding a probe.

“We have learnt from press reports of the reported disclosure by Wal-Mart under the U.S. laws of the amount spent by them on lobbying in various countries, including India,” Parliamentary Affairs Minister Kamal Nath said today (Dec. 11) in the legislature. “The government has no hesitation in having an inquiry” to establish the facts.

Wal-Mart spent as much as $25 million since 2008 on discussions regarding its foreign investments, including in the Indian retail industry, the Press Trust of India reported on Dec. 9, citing disclosure reports the company filed with the U.S. Senate. Opposition legislators disrupted parliament for a second day, demanding to know whether any of this money was spent in India, where corporate lobbying is not allowed.

Parliament last week endorsed a September decision to allow foreign investment in retail stores selling more than one brand, the centerpiece of Prime Minister Manmohan Singh’s biggest embrace of foreign investment in a decade.

In votes in both houses of the legislature, the government defeated opposition parties led by the Bharatiya Janata Party, which argued that the move would put family-owned stores out of business. The win gave new life to a reform push unveiled as growth in the economy slowed to a three-year low.

A “report in the American Senate proves that Wal-Mart spent money in India to enter this country,” BJP leader Yashwant Sinha, said in parliament today, demanding a quick judicial probe into the issue. “The country should know who were the beneficiaries of the money spent by Wal-Mart.”

“These allegations are entirely false,” Arti Singh, a spokeswoman for Wal-Mart’s Indian wholesale joint venture, said in an e-mailed statement. “The expenditures are a compilation of expenses associated with U.S. federal lobbying contacts and include staffing cost, association dues, and payments made to consultants, all in the United States.”

The statement gave no estimate of Wal-Mart’s lobbying expenses.

Overseas companies including Wal-Mart, Tesco Plc and Carrefour SA will benefit from entering the world’s second-most populous nation, where retail sales are estimated to reach $863 billion by 2017, according to a report by Associated Chambers of Commerce & Industry of India and Yes Bank Ltd.

“The Wal-Mart report has come in handy to the opposition to keep alive the issue after the victories of the government in parliament,” said Sandeep Shastri, a lecturer in politics a Jain University in Bangalore. “It’s a stick with which to beat the government.”