Walmart investigates Flipkart staff over alleged ₹150cr in brand favors
What's the story
Walmart, the US retail giant and parent company of Flipkart, has launched an internal investigation into alleged financial misconduct at the Indian e-commerce company, Moneycontrol reported. The probe was initiated after whistleblower complaints that employees in Flipkart's smartphones and luggage & travel accessories (LTA) divisions received kickbacks amounting to over ₹150 crore ($16 million). This is Walmart's third such investigation at Flipkart in less than three years.
Probe specifics
Allegations of kickbacks in B2B operations
The ongoing investigation reveals that some employees were allegedly accepting favors from brands in exchange for preferential treatment.
The alleged kickbacks were mostly taken through the business-to-business (B2B) route at Flipkart, with some employees taking a cut from vendors of certain mobile phone brands when devices moved from one business to another.
Business practices
Flipkart's B2B operations and alleged kickbacks
Flipkart conducts its B2B operations through two main channels: Flipkart Wholesale (for kiranas, retailers, and MSMEs) and the Flipkart B2B Sales Program for marketplace sellers.
The alleged kickbacks were given in exchange for ensuring sellers got preferential treatment on the platform, resulting in higher sales for the vendors concerned.
This incident raises questions about the effectiveness of Flipkart's internal controls and processes.
Past probes
Previous investigations into financial misconduct
Notably, this is not the first time Walmart has investigated Flipkart for financial misconduct.
About two-and-a-half years ago, employees in the LTA department were probed over financial misappropriation. At least three employees were terminated after that investigation.
Six months ago, another case of financial wrongdoing was investigated in the smartphones division. One employee was found guilty and resigned before being fired.
Company challenges
Senior-level exodus and employee dissatisfaction at Flipkart
The ongoing investigation comes at a critical time for Flipkart, which has witnessed a spate of senior-level exits and employee dissatisfaction over ESOP liquidity.
Walmart has not yet decided on the timeline for taking Flipkart public, further fueling discontent among current and former employees.
At least 14 VPs and SVPs have left Flipkart in the last year due to these issues.