Walmart Faces Fallout From Mexican Bribery Allegations
A New York Times report that Walmart paid $24 million to obtain building permits and gain market dominance in Mexico in violation of that country’s laws and those of the U.S., and then covered up the activity after it was brought to the attention of top corporate officials, has brought the retailer a lot of negative attention from investors, the press and legal officials in the U.S.
Yesterday, Walmart’s stock price dropped nearly five percent as the news and its implications for the company spread.
The Washington Post reported that the Justice Department has been investigating the matter since December to determine if Walmart was in violation of the U.S. Foreign Corrupt Practices Act, which prohibits companies paying foreign officials to obtain business. Critics have labeled the law as too broad and detrimental to American business interests.
What is particularly worrisome in this case is that Walmart, upon learning of the bribery campaign, is alleged to have launched an internal investigation into the matter only to have top officials at the company quash it.
According to the Times, then Walmart CEO H. Lee Scott Jr. criticized the company’s investigators for being too aggressive. The investigation files were then sent to Walmart de Mexico to "the same general counsel [who] was alleged to have authorized bribes." It was at that point that no wrongdoing was found and the investigation was dropped without the company ever having notified either Mexican or U.S. officials. Mexico is not investigating Walmart, regarding the bribes as a local matter.
Upon reading the results of the Walmart de Mexico probe, the retailer’s director of corporate investigations described the findings as "truly lacking" in an email to a superior.
"We take compliance with the U.S. Foreign Corrupt Practices Act very seriously and are committed to having a strong and effective global anti-corruption program in every country in which we operate," David Tovar, vice president of corporate communications at Walmart, said in a statement. "Many of the alleged activities in The New York Times article are more than six years old. If these allegations are true, it is not a reflection of who we are or what we stand for."
- Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle – The New York Times
- Wal-Mart faces federal criminal probe tied to allegations of bribery in Mexico – The Washington Post
- Wal-Mart faces big fines amid bribery charges – The Associated Press/Seattle Post-Intelligencer
Discussion Questions: What is your take on the bribery and cover up allegations made about Walmart in The New York Times article? What should the company be doing now to deal with the situation? Do you believe U.S. anti-bribery laws are unrealistic and detrimental to American business interests in countries where bribery is a way of life?