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Binny Bansal ouster: Walmart’s big move in India

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New Delhi, November 15: Binny Bansal, co-founder of India’s most successful start-up Flipkart, has had to go. The news first came, dipped in the on-going #MeToo allegations. He had to go.

His ouster, announced from Walmart’s hometown of Bentonville, Arkansas US left workers at Flipkart, in Bangalore shocked. People in Bangalore are worried about Walmart’s motivations. They fear there could be more to come and more Flipkart leaders to go.

Walmart’s takeover of Flipkart

Flipkart being such a successful venture and a mega giant even in the Indian context was a target of takeover by both Amazon and Walmart for quite some time. After months of negotiations, and competing offers, in May this year Walmart offered to pay US$16 billion for a 77 percent stake in Flipkart which Flipkart accepted. The deal was done.

Within few weeks, in July, a woman who had been involved with Bansal contacted executives at Walmart in Bentonville US. She alleged that binny Bansal had sexually assaulted her in 2016.

As part of the due diligence required these #MeToo days, Walmart appointed a global law firm to investigate. The independent investigation found that he’d had a consensual, extra-marital relationship with the woman and that at the time of their involvement, she was not an employee of Flipkart. The woman in question, had earlier, but not at the relevant time, worked at Flipkart.

Although the investigation disproved the allegation of assault, perhaps not Indian but American context, Walmart’s senior executives still had questions for Binny Bansal. There is a suggested alleged “hush money” paid to the woman which the senior executives think was paid to buy her silence. Walmart not only wanted Binny to explain his conduct of not disclosing any potential litigation risk, they also questioned lack of transparency, lapses of judgement and how Binny responded to the situation.

Walmart confirmed it had initiated an independent investigation into an allegation of “serious personal misconduct.”  Although the probe didn’t uncover evidence to support the charge, however, the company said, “the investigation did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation”.

“Because of this, we have accepted his decision to resign,” Walmart said.

Accroding to Hindustan Times, Flipkart employees and workers at other startups are wondering if Walmart was using the episode to push Bansal aside.

Although it sounds incongruous to hold an executive responsible for relationships outside of the workplace, but the issue here is multi-pronged:

  1. The woman in question had worked for the company Flipkart whose boss was subject of allegations;
  2. The time she worked for the company, whether the two made initial contact during that time, of whatever nature;
  3. The alleged “hush-money”, if paid, puts a question mark on the nature and depth of ‘consent’ from legal point of view; and
  4. Binny Bansal’s duty of disclosure to the majority stakeholder buyer of potential risk, particularly in light of the above a. b. & c. makes it almost arguably obligatory for Binny to be transparent in his conduct and dealings with Walmart.

Walmart having invested so much in Flipkart, has a lot at stake in India’s growing online retail market. India’s retail market is projected to grow to $1 trillion by 2020. Now, without a single dominant local retailer in the Indian market, Walmart and Amazon are in fierce competition to outdo each other to emerge as the market’s leader in India.

In the cultural context, the issue suffered from a clash of cultures. At Flipkart, an Indian company run by Indian, an extra-marital affair would be considered personal; but for Walmart’s senior  executives, who see in global context in this #MeToo age, if you overstep the socially acceptable norms, your personal space is almost none and that made the issue’s disclosure mandatory.

Walmart has said, post Binny Bansal, it has full confidence in the strength and depth of leadership at Flipkart and would support the subsidiary’s “desire to evolve into a publicly-traded company.”

Binny Bansal would continue on the Flipkart board and as a large shareholder.

An emotional Binny thanked all his family and friends saying, “I’m grateful to have had the opportunity to help get us to where we are today.”

K. Dev

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