Connect With Us

FacebookTwitterRSSYoutube

Wal-Mart Accused Of Mexican Bribery

Wal-Mart in Merida, Mexico

Here’s the short version of the Foreign Corrupt Practices Law which was passed in 1977 – if an American company pays money or items of value to a foreign official to get any kind of preferential treatment, that’s bribery and it’s illegal. It is doubly illegal if it violates the law in the country where the bribery took place. American companies, and the Chamber of Commerce, say the law is too vague about what a “foreign official” is. The government says that if the person being paid the bribe gets his/her paycheck from the foreign government, for example an employee of a state-owned company, that is a foreign official. Companies say that bribery, or “greasing the wheels,” is necessary in some countries and any payment that simply makes a person do what they were going to do anyway, just a little faster, should not be considered an illegal bribe. Like too many laws, this one is too vague, but making it less vague welcomes accusations of over-regulating.

Wal-Mart, the world’s largest retailer, apparently engaged in a considerable amount of bribery in order to build stores in Mexico, considerable as in millions of dollars over several years. The company’s top management first learned of the bribery in 2005 through information given them by their top executive in Mexico. An internal investigation was begun, without notifying the relevant Federal regulators or law enforcement in either country. The New York Times has learned that Wal-Mart’s lead investigator issued a report telling management that both American and Mexican laws had probably been violated, at which point, Wal-Mart shut down the investigation.

Twenty percent of all Wal-Mart stores are in Mexico. With 209,000 employees, it is Mexico’s largest private employer. The bribes were paid to facilitate the building of stores across Mexico. Since the bribes were paid to obtain building permits, there is no question they were paid to government officials.

Wal-Mart finally got around to notifying the Justice Department after The New York Times started investigating the situation, this past December. Wal-Mart’s big defense? Many of the “alleged activities” took place more than six years ago. So, Wal-Mart’s spokesman, David Tovar, said “If these allegations are true, it is not a reflection of who we are or what we stand for.” Yup. It is not who they are now. Siblings Jim, Alice and S. Robson Walton, along with sister-in-law Christy, have been the first-tier heirs and owners for twenty years, but, they are not in any way responsible for what the company has done in the past six years, are they? Of course not. That’s what they pay eight figures to a CEO for, so they can just lounge around and enjoy their places in the top ten of the Forbes 400 billionaires list.

Tovar also said that the company takes the law very seriously and “We are deeply concerned by these allegations and are working aggressively to determine what happened.” They have turned over the investigation to outside lawyers and accountants who are FCPA experts. It has also upgraded its executive training in Mexico.

Founder Sam Walton set a very high standard for ethics and morality in his company, as well as a commitment to selling American-made products. Since his death twenty years ago, the company has fought to balance his standards with their drive to aggressively expand across the globe. They ditched the American-made products commitment years ago.

So far, the investigations have uncovered over $24 million in bribes, and evidence that CEO H. Lee Scott, Jr., who served from 2000 to 2009, had the internal investigation in 2005 run by the general counsel for Wal-Mart de Mexico, who allegedly authorized the bribes and naturally cleared the company of any wrongdoing. Scott is the man who oversaw Wal-Mart’s expansion program.

There’s something very circular about this story breaking on the day that Chuck Colson died. One of the more famous observations about Watergate was that if the crime doesn’t get you, the cover-up will.

 

Comments

comments

Share This Post

3 Responses to Wal-Mart Accused Of Mexican Bribery

  1. Alex

    April 22, 2012 at 1:52 pm

    If Walmart can get away with it, then it will do it.
    Join me in never again shopping at this irresponsible retailer.

    • adamas

      April 23, 2012 at 1:40 am

      Unfortunately the problem with that is in quite a few places it’s “The only game in town”.

  2. adamas

    April 21, 2012 at 11:25 pm

    fought to balance hell. Top-level ethics was the FIRST thing the Walton kids got rid of.