Bangaluru: Did Walmart use an old allegation of ‘personal misconduct,’ which had already been settled, to ease Binny Bansal out of the current setup just six months after the Flipkart co-founder drove a hard bargain to sell 77 per cent stake to the American retail giant at $16 billion in May.
Or the US company followed the business ethics code too harshly despite the fact that business culture in its new domain was much different from the US and other regions it is operating in at present?
Walmart communicated Bansal’s exit in a strange and bizarre fashion, said K Ganesh, a serial entrepreneur who has four successful green field ventures and eight investment exits to his credit, including the Pearson-acquired, TutorVista.
“The statement Walmart sent out was harsh, vindictive in nature and damaging to the co-founder who raised the company, along with his partner, from its infancy to a successful level. Let Walmart follow the process, conduct the probe and take adequate actions. But the way it was communicated was not in good taste and I as an entrepreneur and founder myself know how it would have hurt Binny,’’ he said.
In its announcement, Walmart said it had initiated an independent investigation into an allegation of “serious personal misconduct.” The probe didn’t uncover evidence to support the charge. But the company said, “it did reveal other lapses in judgment, particularly lack of transparency, related to how Binny responded to the situation.
Because of this, we have accepted his decision to resign.’’
No wrongdoing was found in the investigation. Nevertheless, a decade after he created e-commerce leader Flipkart, he was calling colleagues to say goodbye, reports Bloomberg. The explanation satisfied almost no one, Bloomberg further wrote.
Flipkart employees and workers at other startups wondered whether Walmart was using the episode to push Bansal aside. His co-founder left after the deal was completed, and several Flipkart employees saw the timing of his resignation as suspicious. Satish Meena, senior forecast analyst and team leader at Forrester Research, was of the opinion that the timing of Bansal’s exit was a bit strange.
“Walmart knew something was wrong in July itself. It seems, later they used this issue an excuse to axe him to minimise his influence on the board. They accused Binny of lack of transparency, but the irony is that Walmart was actually missing it,’’ he said.
The allegations against Bansal surfaced just after Flipkart agreed to sell a controlling stake to Walmart. The deal came after months of negotiations during which Walmart archrival Amazon.com Inc pressed hard to win the deal. In May, Walmart agreed to pay $16 billion for a 77 per cent stake.
The woman who had been involved with Bansal contacted executives at Walmart in July, as they were working to close the US company’s biggest deal ever. She alleged that Bansal had sexually assaulted her in 2016.
Walmart took the allegations seriously enough that it appointed a global law firm to investigate charges. The probe found that he had had a consensual, extramarital relationship with the woman and that she was not an employee at the time of their involvement, though she had previously worked at Flipkart, according to people with knowledge of the investigation.
As per K Vaitheeswaran, e-commerce pioneer and author of the book, Falling to Succeed, Walmart’s Play Book, that says what processes to follow after an acquisition, is already under full-fledged execution. “Walmart is in the process of bringing its own people in key positions at Flipkart. It’s happening quietly but in a steady manner.’’
“Walmart is the majority owner of Flipkart and they need not find an excuse to remove its ex-owner and co-founder.’’ Walmart, that forayed into the country a decade ago, had a bad experience with its partner Bharti and ended the relations in few years. India is the largest learning ground for Walmart as far as e-commerce business is concerned.