June 13: Wal-Mart Stores Inc — the world’s largest retail operator — has flagged India, Brazil, China, and South Africa in addition to Mexico, as countries that represent the highest corruption risk in a global review.

Lawyers for Wal-Mart said they were retained to review the retailing giant’s policies in Mexico, Brazil and China, and later recommended the company also evaluate its operations in India and South Africa. The lawyers referred to those five countries as regions where the risk was the greatest, according to the lawmakers.

The company has acknowledged it is investigating bribery allegations involving its Mexican operations, and that it is conducting a global review of its anti-corruption compliance programme, but has not provided details.

Two Democrat lawmakers investigating the company — Representatives Elijah Cummings and Henry Waxman — said in a letter that Wal-Mart had asked its lawyers to expand the review to a worldwide assessment of the company’s anti-corruption policies.

The review led Wal-Mart to revise its programme to include a new procedure for escalating corruption complaints to senior management and the board's audit committee, the letter said.

Cummings and Waxman wrote to Wal-Mart chief executive Michael Duke and asked him to allow certain witnesses to co-operate with a congressional investigation into the bribery charges.

Rogue vendors

Bharti Walmart, the joint venture with the Bharti group, tried to play down the implications of the widening investigation by contending that the review was part “of our anti-corruption programme that was initiated in March 2011”.

“This includes the global review that the company is conducting of its policies, practices, and controls for FCPA compliance,” a Bharti Walmart spokesperson told The Telegraph.

Wal-Mart has asked KPMG, the consultancy firm, to conduct a due diligence exercise on hundreds of existing vendors as well as potential future suppliers in India to ensure that their operations are squeaky clean.

Bharti Walmart sources supplies from vendors ranging from multinationals such as Hindustan Unilever and Colgate Palmolive to hundreds of small and medium enterprises.

Senior officials at Bharti Walmart said rogue vendors would be weeded out after it received the KPMG report.

Bharti Walmart officials said KPMG would scrutinise the vendors and classify them in three categories: red, amber and green. “The ones falling in the green category will continue doing business with us. We will not continue our association with vendors falling in the ‘red’ category and will think before dealing with the ones falling in the ‘amber’ category,” the executive added.

The expansion of the WalMart investigation to India — a country that the retailing giant entered only in August 2007 — is another blow to a country that is battling a threat by S&P to downgrade its sovereign rating to junk bond status.