In early May, Walmart Inc. (NYSE: WMT) announced that it had agreed to pay $16 billion to acquire a stake of approximately 77% in Flipkart, India’s leading e-commerce company. Six months later, Flipkart’s co-founder and chief executive officer, Binny Bansal, is leaving the company following an internal investigation into an allegation of unspecified “serious personal misconduct.” Bansal has strongly denied the allegation.
In a statement Tuesday morning, Walmart and Flipkart said that Bansal had announced his resignation as CEO of Flipkart effective immediately. The two companies said that Bansal had been an “important part” of Flipkart, “but recent events risked becoming a distraction and Binny has made a decision to step down.”
From the companies’ statement:
While the investigation did not find evidence to corroborate the complainant’s assertions against Binny, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.
Walmart covered its back somewhat by saying that Bansal had been “contemplating a transition for some time and we have been working together on a succession plan, which has now been accelerated.”
Lacking any specifics about either the allegation or the other lapses in judgment or the timing of either, it’s difficult to piece together what, if anything, Walmart knew about the original allegation against Bansal at the time it agreed to buy its controlling stake in Flipkart.
But it is equally difficult to believe that the allegation or the lapses in judgment all refer to events that occurred before Walmart’s acquisition. Is it likely that Bansal suddenly began behaving differently once his pockets were stuffed with Walmart cash?
Did the retail giant fail to do its due diligence in looking into what liabilities may be lurking in the background of the company and its executives?
When did the internal investigation that turned up the other lapses begin? A month ago? Six months ago? Did Walmart have an inkling of what was alleged to have been going on and just decide to ignore it?
These are all reasonable questions and ones that shareholders might want to have answered, especially if Walmart and Flipkart are hit with legal action.
Walmart stock traded down about 1% shortly before noon Tuesday, at $102.82 in a 52-week range of $81.78 to $109.98. The stock’s consensus price target is $105.81.