We Are Shocked, Shocked That Walmart May Have Been Bribing People In Mexico

Hold the darn phone — Walmart has been indicated in a bribery scandal in which the company’s Mexican arm was bribing people to the tune of $24 million to obtain permits, and then attempted to cover up the whole scandal? We shan’t believe it. Ha! Just kidding. That makes total sense.

Yes, we’re being a bit flippant — but that’s only because Walmart seems to have stepped into such a huge pile of you-know-what that we can barely wrap our heads around it.

The New York Times has published a detailed, exhaustive account of allegations against Walmart that claim the company not only used bribes to squash competition and expand in Mexco, but that even when executives at the top of the company were made aware of the reported wrongdoings, those in charge ordered the whole thing hushed up.

It all started in September 2005 when a senior Walmart lawyer was contacted by a former executive at Walmart de Mexico who said the push to expand in the country had led the company to pay bribes in a shocking amount.

Then it gets even better.

Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: “There is reasonable suspicion to believe that Mexican and USA laws have been violated.”

The lead investigator recommended that Wal-Mart expand the investigation.

Instead, an examination by The New York Times found, Wal-Mart’s leaders shut it down.

As soon as Walmart got wind that the NYT was checking into things, the company told the Department of Justice they were looking into possible violations of the Foreign Corrupt Practices Act, “a federal law that makes it a crime for American corporations and their subsidiaries to bribe foreign officials. Wal-Mart said the company had learned of possible problems with how it obtained permits, but stressed that the issues were limited to ‘discrete’ cases.”

“We do not believe that these matters will have a material adverse effect on our business,” the company said in a filing at the time with the Securities and Exchange Commission.

Really, it’s mind-boggling — and that’s just the gist, the tip of the gigantic shopping cart iceberg careening through the company, if you will. The whole report is about 7,600 words and tangled all the way through with jaw-dropping allegations.

Walmart has responded to the articlewith a post on their corporate site titled, “Walmart Statement in Response to Recent New York Times Article About Compliance with the U.S. Foreign Corrupt Practices Act” that reads, in part:

We take compliance with the U.S. Foreign Corrupt Practices Act (FCPA) very seriously and are committed to having a strong and effective global anti-corruption program in every country in which we operate.

We will not tolerate noncompliance with FCPA anywhere or at any level of the company.

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. We are deeply concerned by these allegations and are working aggressively to determine what happened.

In the fall of last year, the Company, through the Audit Committee of the Board of Directors, began an extensive investigation related to compliance with the FCPA. That investigation is being conducted by outside legal counsel and forensic accountants, who are experts in FCPA compliance, and they are reporting regularly to the Audit Committee.

We have met voluntarily with the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to self-disclose the ongoing investigation on this matter. We also filed a 10-Q in December to inform our shareholders of the investigation. The Company’s outside advisors have and will continue to meet with the DOJ and SEC to report on the progress of the investigation.

We are committed to getting to the bottom of this matter. The audit committee and the outside advisors have at their disposal all the resources they may need to pursue a comprehensive and thorough investigation.

Oh so, since it happened over six years ago, this should all just be old news and we can all forget about it, huh? Somehow we have a feeling this whole things isn’t going to blow over so easily.

Read the entire article by the New York Times in the source link below, and see if your brain doesn’t feel just a bit exhausted after doing so.

Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle [New York Times]

Comments

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  1. YouDidWhatNow? says:

    …if they wanted to pay me a bribe, I could probably forget about how every “Rollback” sign is another lost American factory…

    • vastrightwing says:

      Is there anyone here who actually is a tiny bit surprised? I’d be shocked if I heard that Walmart was in Mexico and hadn’t done what was described in the article.

      Doing big business in the U.S. is only different in that you have to be way more discreet than in Mexico. You have to entertain officials, give donations, considerations and gifts, give loans at 0.01% interest, give them rides in your jet, let them use your vacation home, etc., etc.

      “Considerations” are also part of the economy. Unfortunately, since everyone thinks inducements are so bad, we don’t have records on how much of the economy depends on some sort of corruption. I think it’s a significant part of the economy. Otherwise, how do you think things would get done?

    • StarKillerX says:

      But the question is who is to blame for those lost jobs Walmart or the American consumers who have shown time and again, over the last 40 years, that they are not willing to pay a premium for goods made in the US.

  2. pot_roast says:

    What this really boils down to is.. Mexican executives of an American company while working in Mexico .. basically did what is expected in Mexico with its corrupt government. Then hid it from their American supervisors.

    Says so right here in the article: “They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark”

    Bribery = business as usual in Mexico. That’s part of the problem.

    • vnlindstrom says:

      Totally agree. I know lots of folks in Mexico that are waiting for permits and other administrative stuff, and those who are going by the book have no idea when or if their requests will be approved.

      Also, $24 million is a lot of money? I bet Walmart HQ spends that much on “fees” and “miscellaneous expenses” (read: political and other bribes) for a single U.S. store when they move into a new town.

    • Blueskylaw says:

      Walmart knows fully well how business works in Mexico, they are not stupid. They will not question things if all is going well and the bucks are rolling forward and when the sh*t hits the rotating oscillator (fan) like it did, they will feign surprise, take it “seriously”, promise to get to the bottom of things, pay their fines, admit no guilt and business goes on.

      Rinse=lather=repeat=golden parachute

      • EnergyStarr says:

        whoa you have inside knowledge that Wal Mart corporate knew this all along? this could be a huge case for you!

  3. darabidduckie says:

    Wait, I thought everybody bribed people in Mexico… I thought that’s just the way it was down there.

    • u1itn0w2day says:

      They also assassinate law enforcement & press on a regular basis. Honest witnesses included.

  4. Alys Brangwin says:

    That sure is ironic considering how much local governments fall over themselves in the US to throw money at large companies that might bring jobs to a small city. Absolutely disgusting.

    • Naked-Gord-Program says:

      Yep. It’s funny how bribery is legal when it’s the government paying off their corporate buddies.

      These ‘incentives’ to corporations need to stop or every area will compete against everyone else until we’ve lost our first world status and we’re living in the new India.

      • Velvet Jones says:

        Those living in the Minneapolis metro are learning that lesson once again. Hundreds of millions in tax money about to be “given” to a private business, all because said business black mailed the city(pay me or I move my team to LA). How is this any different?

  5. donovanr says:

    Yes even the walmart logo is different now. Its not like the company made billions that it otherwise wouldn’t have made had it not made the bribes. Oh wait a second it did make billions because of the bribes; thus should not the fines be proportional to the gains? Otherwise the probable small fines are just a new bribe to buy a get-out-of-jail-free card for the executives. Some prosecutor gets to bag say 50 million in fines and the company keeps on like normal with some “structural changes” in place to prevent this from happening. This all as opposed to real justice where people who further corrupted a third world country going to jail and losing everything they own as a petty drug dealer would get in jail time and lost property due to some proceeds of crime seizure law.

  6. coldwatersrundeep says:

    It does’nt surprise me in the least. Wally World being the one of the biggest corporations in America, it would’nt surprise me in the least that over the years they have bribed other people to get to where they are today.

  7. firemunkie says:

    anyone who knows anything about business(and pretty much anything) in mexico knows that this is the norm.

    one time family of mine was traveling in mexico, a trasnsito (traffic cop) pulled them over for goin 15km over and started hasseling them. finally the driver said, i know you want a bribe but i have no money to give you, the cop said i want 500 pesos. after some negotiating he settled for a grilled chicken some tortillas and two sodas. they cop and his partner were just hungry.

  8. KyBash says:

    $24 million? Wow! At Target or Kohl’s that would have been over $40 million. Way to go, Wal-Mart, on the price savings!

  9. waicool says:

    yawn, as an American consumer the only relevance this article has to me is the strange fascination i have watching Mary Beth tally her walmart stories for 2013′s poo award.

  10. Professor59 says:

    OMG Outrage! Oh wait. That’s how every company must operate in foreign countries. Also in many places right here in the good old USA.

    Not news, except about why they picked on Walmart…

    • samandiriel says:

      They picked on WalMart because it touts itself as being a highly ethical company

    • u1itn0w2day says:

      Your right. Other companies have been doing it for decades. Wasn’t the pollution from a Mexican Chrysler Plant so bad it was affecting towns in the US(Brownsville?).

      The problem alot of these countries don’t even have laws like the US. They lack not only anti bribery laws they lack basic building codes and zoning laws. They lack anti pollution & worker safety laws. Those corporations who voluntarily chose to exploit these loopholes don’t care or realize that the local citizenary will spend more money fighting the effects from lack of structure & laws than they will on their product.

  11. RxDude says:

    When in Rome…

    I’m no Walmart fan, but bribes are just part of doing business in many countries. Does anybody else remember the minor flap a couple of years ago over a Finnish guide to tourism in Russia that included instructions for bribing Russian officials?

    Even in some American cities, I understand building permits and such can be delayed for quite a while unless some “extra consideration” is made.

    The practice may not be right, but the recipients of the bribes bear at least half of the blame.

    • u1itn0w2day says:

      Assassinations are also part of doing business in Mexico. Should that be condoned?

    • Mrs. w/1 child says:

      Chicago consideration is legendary and I would guess at least as formidable as Mexico’s consideration requirements. *grin*

  12. Alliance to Restore the Republic of the United States of America says:

    PR speak counter:

    “we take seriously”; check
    “committed to”; check
    “alleged” ;check
    “concerned”; check
    “allegations”; check
    “committed to” again; check
    A bunch of other doublespeak designed to confuse the issue; check

  13. cspschofield says:

    Now awaiting New York Times story on how NYT reporters have to bribe Mexican officials in order to get anything done in Mexico.

    *crickets chirping*

    Mexico is a kleptocracy. It has been a kleptocracy for longer than anybody has been alive. If the area has EVER been decently governed in recorded history, I am unaware of it.

    • kobresia says:

      They’re just following the example the Spanish conquistadors set for them!

      • cspschofield says:

        You aren’t going back far enough. All the evidence that I am aware of points to the Conquistadores being about average or a slight improvement.

  14. Bstagger says:

    ‘Bribery = business as usual in Mexico. That’s part of the problem’

    Extending a little on this comment…or rather condensing it a little. Bribery = Business as usual. Period. Honestly, isn’t it kind of the American way? In the least offensive manner possible. If you have money to throw around to get your way, and people are willing to accept said money to allow you to get your way, it’s going to happen. Actually, saying that’s the American way might be unfair, it’s the world’s way in general. Money = Power, at the end of the day. If you have it, you can get away with things that people who don’t have it, wouldn’t be able to.

  15. chrisdag says:

    The keyboard commandos posting here saying “it’s not a big deal! Everyone does it!” are obviously not familiar with the US Foreign Corrupt Practices Act (FCPA).

    This is a *big* deal for any US company. The rules are clear and the penalties are pretty harsh.

    • Talmonis says:

      That’s just it, those people who defend it don’t have a problem with non-government (sorry, non U.S. Government) corruption, because it’s a prominent part of capitalism. In the eyes of many people greed, corruption and malfeasance are good things, to be lauded if they produce a higher profit margin for the boards & CEO’s of the world. Dont’ forget, these same people thought that the Shareholders of Citi had no right to be angry with it’s Board and CEO’s salaries.

    • LorgSkyegon says:

      No, it’s not a big deal because the FCPA specifically excuses bribes paid to officials for things within a normal course of action, i.e. paying an official for a permit that the law says they have to issue anyway, even though he won’t do it without a bribe

  16. Blueskylaw says:

    Walmart, like top politicians, didn’t get to where they are by playing by the rules.

  17. u1itn0w2day says:

    A Walmart can wreck the countryside just as much in Mexico as in the US. Will Walmart build adequate roads with proper traffic control. Will they have a proper sewer system or will they dump on the public like some of the US auto plants have done over the decades. Will the building inspectors follow a modern code like earthquake or hurricane resistant or build a big hut that will collapse after a few drops of rain or a few shivers from a quake. Is there enough power for that area? Is the infrastructure there? Mexican shoppers and residents don’t deserve those pesky building codes & zoning laws ment to protect them?

  18. Traveller says:

    You can make all the stink you want, but this is how things are done in certain parts of the world.

  19. Mr Grey says:

    I just assumed that this is how business is done in most places -

  20. jayphat says:

    ” We Are Shocked, Shocked That A US corporation in the most corrupt country in world May Have Been Bribing People In Mexico”

    FTFY

  21. dicobalt says:

    Fun fact: In Mexico you have to pay for parking at Walmart.

  22. Gorbachev says:

    Electronic Arts is still worse.

    /sarcasm

  23. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    You forgot “appalled”. In my area, it’s “shocked and appalled”.

    A former coworker hated going to Mexico to inspect factories there. Once he was pulled over for a traffic violation, and the police took him right to an ATM machine. Turns out the fine he had to pay, on the spot, was whatever he could take out of his checking account.

    This story doesn’t surprise me in the least. If people think this doesn’t go on all over the world, every day, with almost every company, they’re dreaming.

  24. DragonThermo says:

    Why are you surprised? Mexico is a lawless nation. The ostensible federal gov’t is just there to give the place a sense of legitimacy, but in reality the place is run by gangs and drug lords. What we call a “bribe”, to them it is what we would call an “application fee”.

    • u1itn0w2day says:

      +1

      That’s sums it up. The false premise of being a full fledged first world country must be maintained by outside governments & corporations so they can exploit their global agenda. Should say exploit the globe period.

  25. evilpete says:

    I’ve always wondered about companies making multi million $¬£‚Ǩ¬• bribes, and the executive accountants not noticing.

    That tells me there is a lot of cash floating around unaccounted for.

    And if the knew $24mil was going to bribes, how do they know all $24mil was going into bribes, its not like the Mexican government hands out receipts for bribe mone

    • u1itn0w2day says:

      I’m surprised Walmart didn’t have the guts to call ‘foreign lobbying expenses’. Should a Mexican official be considered their very PAC fund.

    • jayphat says:

      If you read the article, they did a really good job of throwing the money into what can only be described as “slush fund” accounts, but by god they know if someone is misusing a pack of pens in a store.

  26. SteveHolt says:

    People, people! Didn’t you read the entire article? Walmart is TAKING THIS SERIOUSLY! All is well.

  27. Chaluapman says:

    I would have been shocked if they weren’t

  28. AllanG54 says:

    Walmart is rich enough and if the fine is big enough we could pay down the national debt. This could turn out to be a win situation for the US.

  29. oldwiz65 says:

    They do the same thing here, except that it’s called “campaign contributions” or “gifts” or “salaries”. It’s just more blatant in Mexico than it is here.

  30. gman863 says:

    Paying off local officials for zoning permits? “Negotiating” with unions over construction projects. Gasp! I’m sure this never happens in the United States, especially ethical cities like Chicago and NYC.

    Riiiigggghhhht.

    This was just a practice run for Wally World’s eventual takeover of corrupt, mafia-controlled areas in th US.

  31. RickScarf says:

    “Grease money” is completely legal, if that’s what this turns out to be – money that doesn’t get you benefits others cannot get, but rather money that helps you get the things anyone else can get, but faster.