The Indian arm of the world’s largest online retailer Amazon has launched an investigation into the legal department’s conduct after facing bribery allegations. The company allegedly paid legal fees in order to bribe officials at different levels throughout the country. Sources in the government indicated that the legal fees paid by six Amazon companies over two financial years are virtually equivalent to 20.3 percent of the stated revenue.
INVESTIGATING THE MATTER
The E-Commerce giant has promised that it will investigate alleged graft charges involving six companies that allegedly paid Rs 8,456 crore as legal fees against total revenue of Rs 42,085 crore in 2018-19 and 2019-20. Based on the financial statements filed by six Amazon companies, Amazon Seller Services Private Limited based in Bengaluru paid the maximum legal fee compared to revenue data.
Other Amazon companies also incurred high legal fees, according to the financial statements. A spokesperson for the company announced on Monday that the matter was being looked into internally. According to the spokesperson, ‘We have zero tolerance for corruption. If there is unwarranted corruption, we will investigate it thoroughly and take appropriate action’.
Sources have confirmed that the retail giant is investigating whether legal fees financed by it were used to bribe government officials. The retailer’s spokesperson had said, ‘We are not commenting on specific allegations or the status of any investigation at this time’. As part of its internal investigation, Amazon has asked its senior corporate counsel to go on leave.
KEEPING AN EYE ON CHARGES:
According to Government sources, there is zero-tolerance policy towards any form of corruption. This alleged act did not take place during the period and state mentioned in the report. The E-Commerce giant, however, has spent more than Rs 8,500 crore on legal fees. A source said, ‘It’s time to think about where all this is going since this doesn’t seem like the best practice’.
TRADERS SEEK CBI EXAMINATION
The allegations leveled by the whistleblower and the internal investigation of bribery add to Amazon’s concerns in India. The small local retailers are threatened by the global giant’s business practices, which some Indian trade associations have openly challenged. In a letter to Commerce Minister Piyush Goyal, the Confederation of All India Traders (CAIT) has called for a probe of legal fees by the CBI. The CAIT represents 70 million traders.
‘The government must get the issue of legal fees used by Amazon to pay bribes investigated thoroughly, as it calls into question the credibility of the government and its officials,’ said CAIT Secretary General Praveen Khandelwal. In addition, the government needs to protect the Indian e-commerce market and retail trade from undue influence, abuse of dominance, and connivance with government officials that are prohibited under the Anti-Corruption Act. ‘This (internal Amazon investigation) relates to Amazon’s admission of bribing government officials. In order to protect the Indian e-commerce market and the retail trade from undue influence, abuse of dominance, and connivance with government officials, which falls under the Anti-Corruption Act’, CAIT Chairman BC Bharti stated.
ARISING COMPETITION DEVELOPS TROUBLE
The Indian e-commerce market, valued at over $1 trillion, is getting crowded, and the firm is facing stiff competition from Flipkart, the Tatas, and Reliance JioMart. To expand the company’s business in India, over $6 billion dollars has already been committed. This controversy is likely to affect its future goals in the country as it may face more heat from the government. The complaint against Amazon followed a Reuters report in February that quoted internal documents indicating that Amazon bypassed Indian FDI for e-commerce.
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Furthermore, the article pointed out that Amazon gave preferential treatment to a small group of sellers on its India platform and concealed its ties with sellers in order to flout foreign investment rules for e-commerce. It is already under investigation for antitrust violations in India and suffered a legal setback in August. The E-Commerce giant suffered a legal setback in August when the Supreme Court refused to interfere with the Karnataka High Court’s order confirming a probe by the Competition Commission of India (CCI) against Amazon and Flipkart for alleged anticompetitive practices.
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