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.