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JP Morgan settlement may be decisive moment for Wal-Mart

A new wind may be blowing at the DOJ. Its tentative deal with JP Morgan indicates a willingness to take a tougher attitude on remediation. The DOJ is asking for a big payment, $13 billion, but the really big news is that DOJ reportedly hasn’t dropped the criminal investigations and will require the bank to admit wrongdoing.

This could be the time to press the DOJ and SEC to think big and in new ways about resolving Wal-Mart’s FCPA  investigation.

We discussed in prior posts, the working conditions of compliance officers, the problem of retaliation and career suicide for doing the job, and the role model of Compliance Heroes. Many of these problems are related to powerlessness and the need for advocacy by or on behalf of compliance officers to challenge the status quo.

All of these concerns come together in the DOJ and SEC’s handling of the Wal-Mart investigation. I write this as a caution to the profession and to compliance officers around the world: If the Wal-Mart investigation is not resolved properly by the DOJ and SEC, it will set back the profession and harm the safety and working conditions of compliance officers everywhere. On the other hand, the Wal-Mart case is an historic opportunity for the DOJ and SEC to change FCPA enforcement and finally recognize the role and risks of compliance officers.

Among the biggest challenges to achieving real progress through the Wal-Mart case is the complete absence of advocacy by and on behalf of compliance professionals and the affected citizenry. The DOJ and SEC are hearing only Wal-Mart’s version of what happened in Mexico and other countries, and what happened to the compliance professionals inside Wal-Mart who tried to respond to problems they saw. The enforcement agencies should be hearing the voices of compliance officers and the citizens from Mexico and other countries where the alleged bribery happened.

The result of all this silence is very troubling. Assuming there’s a typical FCPA settlement, the DOJ and SEC will close the case with no explanation of what happened beyond the formal paperwork. The compliance officers who were inside the company will be ignored again by the feds, the alleged violations and cover up won’t be sanctioned in precedent-setting ways, and Wal-Mart will be allowed to keep the stores allegedly made possible through bribes to local officials. Meanwhile, any settlement funds collected by the DOJ and SEC will go to the U.S. Treasury, rather than helping the affected countries build stronger civil societies that can resist future campaigns of corruption.

This outcome would be a shame. Instead, the DOJ and SEC can seize the moment to reshape the future of FCPA enforcement. They can encourage the board of directors of Wal-Mart to do the right thing, and that means agreeing to do something extraordinary. The DOJ and SEC can set an example of new remediation that upholds the goals of the FCPA as never before.

Can advocacy make it happen? No one knows for sure. There are no precedents. But I do know that if nothing is attempted, we will never know what might have been.


Michael Scher is a contributing editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He is affiliated with ethiXbase, the owner of the FCPA Blog. He can be contacted here.

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