India enforcement agency threatens Flipkart, founders with $1.35 billion fine

India’s financial-crime agency has asked Walmart’s Flipkart and its founders to explain why they shouldn’t face a penalty of $1.35 billion for alleged violation of foreign investment laws, three sources and an agency official told Reuters.

The Enforcement Directorate agency has been investigating e-commerce giants Flipkart and Amazon.com Inc for years for allegedly bypassing foreign investment laws that strictly regulate multi-brand retail and restrict such companies to operating a marketplace for sellers.

The Enforcement Directorate official, who declined to be named, said the case concerned an investigation into allegations that Flipkart attracted foreign investment and a related party, WS Retail, then sold goods to consumers on its shopping website, which was prohibited under law.