The Enforcement Directorate, which probed the alleged violation of foreign exchange laws by Walmart in its investments in domestic supermarket chain Bharti Enterprises, has found no infringement by the US retail giant.

The Enforcement Directorate had conducted a probe following a complaint by CPI Rajya Sabha Member M. P. Achuthan.

Achuthan had written to Prime Minister Manmohan Singh alleging that a unit of Walmart in 2010 bought $100 million worth of compulsorily convertible debentures in Cedar Support Services Ltd, the holding company through which Bharti controls Easyday, a multi-brand retail chain. He had alleged that the investment was illegal as the amount was used by Bharti to fund investments in front-end retail.

A source in the Enforcement Directorate on Thursday said there seems to be no violation. The ED has forwarded its report on the probe to the Reserve Bank of India, which will take a final call. Based on its judgment, the RBI can either slap a fine or issue a warning to Walmart as well as Bharti Enterprises for not converting the $100 million worth of debentures into 49 per cent equity in time.

The Government had tweaked rules on foreign direct investment in retail. Last September, it allowed foreign companies to hold up to 51 per cent stake in multi-brand retailers.

ED sources pointed out that the deal between Walmart and Bharti Enterprises was in line with the RBI’s rules and other regulations enabling indirect investments.

Last week, Bharti Enterprises and Walmart Inc ended their seven-year partnership.

> bindu.menon@thehindu.co.in

>shishir.s@thehindu.co.in

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