The New York Times published an account today about $24 million in bribes paid by Walmart’s Mexican subsidiary for licenses to expand throughout the country, and a massive cover up of the bribes after they were discovered as early as 2005.
David Barstow’s report said:
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.
Walmart joined our corporate investigations list in December 2011.
The New York Times story said,
In December, after learning of The Times’s reporting in Mexico, Wal-Mart informed the Justice Department that it had begun an internal investigation 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.
In response to the NYT’s report, Walmart issued the following statement:
“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.
“We have taken a number of actions in Mexico to establish stronger FCPA compliance. We have implemented enhanced FCPA compliance measures including:
robust policies and procedures;
enhanced auditing procedures; and
issue escalation and remediation protocols.
“In addition, we have established a dedicated FCPA compliance director in Mexico that reports directly to our Home Office in Bentonville.
“The investigation is ongoing and we don’t have a full explanation of what happened. It would be inappropriate for us to comment further on the specific allegations until we have finished the investigation.”We are working hard to understand what occurred in Bentonville more than six years ago and are committed to conducting a complete investigation before forming conclusions. We don’t want to speculate or weave stories from incomplete inquiries and limited recollections, as others might do.
“Unfortunately, we realize that, at this point, there are some unanswered questions. We wish we could say more but we will not jeopardize the integrity of the investigation.
“We are confident we are conducting a comprehensive investigation and if violations of our policies occurred here, we will take appropriate action.
“Over the last several years, Walmart has focused diligently on FCPA compliance and implemented a series of changes to our FCPA compliance program to further strengthen them. This work is ongoing and continues today.
“As part of that effort, in the spring of 2011, we initiated a worldwide review of our anti-corruption program. We are taking a deep look at our policies and procedures in every country in which we operate. This includes developing and implementing recommendations for FCPA training, anti-corruption safeguards, and internal controls.
“Acting with integrity is the essence of our corporate culture. We have the same high standards of integrity for every associate – regardless of his or her position – and everyone is held accountable for those standards.
“In a large global enterprise such as Walmart, sometimes issues arise despite our best efforts and intentions. When they do, we take them seriously and act as quickly as possible to understand what happened. We take action and work to implement changes so the issue doesn’t happen again. That’s what we’re doing today.
“Walmart is committed to doing the right thing and we are working hard every day to become an even better company.” For additional background, please click here to view the key events in Walmart’s anti-corruption compliance programs.
“About Walmart Wal-Mart Stores, Inc. serves customers and members more than 200 million times per week at over 10,000 retail units under 69 different banners in 27 countries. With fiscal year 2012 sales of approximately $444 billion, Walmart employs more than 2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity.”