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Intensifying its probe into the alleged FEMA violation by Bharti Walmart, the Enforcement Directorate (ED) has issued notices to four companies that received Rs 456 crore under automatic route as FDI.
The agency also sought the details of these companies namely Bharti-Walmart Pvt Ltd, Cedar Support Services Limited, Bharti Retail Limited and Bharti Retail (Holding) Pvt Ltd, from Securities and Exchange Board of India (Sebi) and the Registrar of Companies (RoC).
The ED started its probe after receiving a reference from the Prime Minister's Office on the complaint of CPI Member of Parliament MP Achuthan. The complaint was first forwarded to RBI which directed the ED to look into the matter.
The RBI letter, accessed by The Indian Express, stated, "In March/April 2010, Walmart USA invested a sum of Rs 456 crore in Ms Cedar Support Services Ltd (Cedar) under automatic route as FDI. The entire FDI is alleged to have been invested by Cedar in its 100 per cent subsidiary — Ms Bharti Retail Ltd. It is further alleged that Ms Bharti Retail (holdings) Pvt Ltd held 100 per cent stake of Bharti Retail Ltd."
A Bharti Walmart Pvt Ltd spokesperson, in an e-mail reply said, "We have recently received the notice. We will be working to provide the authorities with relevant information." On being asked about the allegations of FEMA violations, the spokesperson stated, "We are in compliance with India's FDI guidelines. All procedures and processes have been duly followed and details filed with relevant Indian government authorities, including the Reserve Bank of India."
RBI, during its inquiry, also found that Cedar was indulging in certain activities which were not permitted by the government. In its letter RBI further said, "The Memorandum of Association submitted by the company indicated that the objects to be pursued by the company included certain activities which require government approval. The company has been advised to approach DIPP to confirm that its activities are fully complaint with the FDI policy."