The clarification came after reports that Amazon had spent about Rs 8.546 billion, or $1.2 billion on legal and professional fees, in the country in 2018-2020 in 2018-2020. In a clarification letter sent on September 28, Amazon said Amazon India Limited was not affiliated with Amazon`s Indian subsidiaries. The global e-commerce giant said its legal fees in fiscal years 19 and 20 were not crore 8,546 crore, as quoted in the media. In its statement, Amazon announced that the actual legal fees for the financial year ending March 2020 amounted to approximately £52 billion. The excitement follows a report in the publication “The Morning Context,” which states that Amazon has launched an investigation into the conduct of its legal representatives in India. According to the report, a whistleblower claimed that a certain amount paid by Amazon in legal fees was used to pay bribes from one or more of its legal representatives. On September 21, Amazon shed light on the cost of legal and professional services for Indian businesses of the e-commerce major, saying some of the data from its public account submissions was misquoted. According to sources, Amazon has written to Trade and Industry Minister Piyush Goyal, saying these reports are inaccurate and appear to be due to “a misunderstanding” of some submissions, particularly a “legal and professional fees” element that includes significant non-legal fees. Read also: “The huge amount spent on legal fees clearly shows how Amazon and its subsidiaries are abusing their financial muscles to bribe and manipulate Indian government officials,” Khandelwal wrote to Commerce Minister Piyush Goyal. Sources familiar with the company`s accounting records said Amazon Retail India Pvt Ltd, Amazon Seller Services Pvt Ltd, Amazon Transportation Services Pvt Ltd, Amazon Wholesale (India) Pvt Ltd and Amazon Internet Services Pvt Ltd (AWS) together spent Rs 3,240 crore in 2018-19 and Rs 5,126 crore in 2019-2020 crore as legal fees in India. Khandelwal cited a press article in support of his claim. He asked why Amazon would spend 20% of its global revenue on legal fees. Based on these MCA documents, CAIT found that the total legal fees incurred by five Amazon group companies over the three-year period (FY17-18, FY 18-19, FY19-20) amounted to CRO 5,262.

These group companies include Amazon Retail India Private Limited, Amazon Seller Services Private Limited, Amazon Transportation Services Private Limited, Amazon Wholesole (India) Private Limited, and Amazon Internet Services Private Limited. The sales organization said it was necessary for Amazon to clarify to which lawyers the company paid these legal fees. The development came after an India Today report claimed that the company had spent about Rs 8,456 crore on legal fees, compared to a turnover of about Rs 42,085 crore in 2019 and 2020. The Indo-Asian news service also reported a figure of $1.2 billion that Amazon had paid as legal fees in India to stay operational. While government sources said that the “attorneys` fees” paid by Amazon companies in 2018-19 and 2019-2020 were over Rs 8 trillion, a look at the financial reports of five Amazon companies in India shows that spending on “legal professional fees” in 2017-18, 2018-19 and 2019-20 was about Rs 5.22 trillion. Financial reports submitted by five Amazon companies show that the maximum amount was paid by Amazon Seller Services Private Limited, based in Bangalore. In fiscal years 2018-20 and FY2019-20, it paid Rs 1,448 crore and Rs 1,969 crore as legal fees against a turnover of Rs 7,800 crore and Rs 11,000 crore respectively. In 2017-2018, the payment was Rs 1,145.1 crore.

A legal expert also pointed out that most expenses reported as attorneys` fees may not be used for compliance and litigation, but also to facilitate operations in the country. Speaking to India Today TV, CAIT General Secretary Praveen Khandelwal said: “The government must ensure that the issue of legal fees used by Amazon to pay bribes is thoroughly investigated as it calls into question the credibility of the government and its officials. In addition, the government must protect India`s e-commerce and retail market from the undue influence, abuse of dominance and tolerance of government officials covered by the Anti-Corruption Act. According to Monday`s report from The Morning Context, Amazon opened an investigation after a whistleblower said lawyers associated with the company bribed officials. “The online retailer is investigating the behaviour of its legal representatives in India after allegations of corruption came to light,” the report said. Sources confirmed that the retail giant is investigating whether the attendance costs it funded were used to bribe government officials. According to sources, Amazon has asked one of its senior management consultants to be put on leave as part of its internal investigation. “It is not clear from the report at what time this alleged act took place and in what state it took place.

However, documents show that Amazon spent more than Rs 8,500 crore on legal fees. It`s time to consider where all of this is going, as it doesn`t seem to be the best business practice,” one source said. Citing anonymous people familiar with the case, The Morning Context said the legal fees paid to the outside lawyer were in part “directed towards corruption by government officials.” Sundaram has been suspended, the report added. The Confederation of All Traders of India (CAIT), which represents 70 million traders, has written a letter to Commerce Minister Piyush Goyal requesting an investigation by the IWC into the issue of legal fees. To begin with, we`d like to tell you that Amazon`s clarification of legal claims is a blatant lie to hide their illegal business practices, and is inconsistent with the regulatory filings of Amazon and its subsidiaries. This clarification raises more questions than answers and, therefore, a serious investigation is urgently needed,” the letter reads. Read also: Amazon writes to Piyush Goyal and opposes CAIT`s allegation of legal fees Amazon is already under antitrust investigation in India. In August, Amazon suffered a legal setback when the Supreme Court refused to interfere with the Karnataka Supreme Court`s order, which supported an investigation by the Indian Competition Commission (ICC) into Amazon and Flipkart for alleged anti-competitive practices. Government sources pointed out that by describing expenses as high as “legal fees,” Amazon may have facilitated operations in India by reporting the amount as a compliance and litigation cost. Amazon has disclosed its attorneys` fees to the government, saying the costs also include fees, according to the sources. The US-based company also said it spent a total of Rs 1,967 crore during the year under review for legal and professional fees. On the other hand, these costs involve a greater amount of work, including money spent on things like finding customers, onboarding merchants, or tax advice.

“Unusually high expenses as legal fees certainly raise doubts, especially if the government has received written complaints from various people, including the Local Retailers Association. The case is currently under consideration, and if necessary, the competent authority can investigate,” said a second person, another government official. A report by Morning Context says Amazon launched an investigation after a whistleblower filed a complaint against the company`s legal representative, who played a role in bribing Indian officials. While the company has not commented on this particular issue, it has said that immediate action will be taken for any inappropriate action. E-commerce giant Amazon reportedly spent Rs 8,456 crore on legal fees to maintain its presence in the country in 2018-2020, according to PTI. The retailer is investigating a whistleblower complaint about the corruption of one or more of its legal representatives. “For example, the lawyer`s fees for the year ending March 31, 2020 were Rs 52 crore, out of the total legal and professional costs of Rs 1,967 crore,” he added.