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Co-founder of Indian e-commerce unit quits after probe into misconduct complaint

By Newley Purnell and Sarah Nassauer 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 14, 2018).

Walmart Inc. said the chief executive of Flipkart Group, its Indian e-commerce business, resigned following an independent investigation into a personal misconduct allegation.

Binny Bansal, one of the co-founders of Bangalore-based Flipkart, decided to step down after "recent events risked becoming a distraction, " Walmart said Tuesday.

Walmart opened an investigation this summer after a former Flipkart employee came forward alleging Mr. Bansal had sexually assaulted her sometime around 2016, according to a person familiar with the matter.

During the negotiations this year to sell Flipkart to Walmart, Mr. Bansal didn't disclose the allegation against him or that he had hired security personnel to privately deal with the matter, the person said.

As part of the investigation, Mr. Bansal told Walmart he had a consensual relationship with the woman and denied he assaulted her, the person said.

"These events relate to a claim of serious personal misconduct made against me, which was uncorroborated after a thorough investigation completed by an independent law firm," Mr. Bansal said in an email sent to staff Tuesday that was reviewed by The Wall Street Journal. "The allegations left me stunned and I strongly deny them."

Mr. Bansal didn't respond to the Journal's request for comment.

While the investigation didn't find evidence to corroborate the complaint against him, it revealed other "lapses in judgment," and a "lack of transparency" in how Mr. Bansal responded to the situation, Walmart said.

The company said Mr. Bansal had already been contemplating leaving the role and was working with the company on a succession plan.

Walmart earlier this year purchased a 77% stake in Flipkart for $16 billion, its largest-ever acquisition, making the company a cornerstone of Walmart's plans to remake its international portfolio. After the deal, Judith McKenna, chief executive of Walmart International, hailed Flipkart's top brass. "It's got scale, it's got growth, but it's also got a great management team," she said of the startup.

Kalyan Krishnamurthy, who has led the Flipkart unit since 2017, will now oversee the company's two online fashion retailers Myntra and Jabong. Ananth Narayanan, who is the CEO of Myntra and Jabong, will report to him.

Online retail in India is growing quickly as inexpensive smartphones and cheap mobile data plans proliferate and shoppers become more comfortable paying online. India's online retail sector was worth about $20 billion last year but is expected to rise to $35 billion by 2019, according to research firm Forrester.

Amazon.com Inc. founder Jeff Bezos has pledged to invest $5 billion in India, and the Seattle company has made rapid gains against Flipkart in recent years.

Mr. Bansal and Sachin Bansal, who share the same last name but are unrelated, founded Flipkart in 2007, having both worked earlier at Amazon Web Services in India. Like Amazon, Flipkart began by selling books, expanding quickly over the years to sell everything from smartphones to spices.

"This is a distraction for the company," said Satish Meena, an analyst at Forrester. "It will take some time to digest for the employees."

"Sachin was the person who was the visionary," said Mr. Meena. "Binny was more of an operational guy," he said, though he said Mr. Krishnamurthy had been running most day-to-day aspects at the firm of late.

Kimberly Chin and Corinne Abrams contributed to this article.

Write to Newley Purnell at newley.purnell @wsj.com and Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

November 14, 2018 02:47 ET (07:47 GMT)

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