We considered in a prior post the new spirit of tough enforcement at the DOJ and SEC and the need to seize the opportunity for more advocacy by the compliance profession, in particular to head off a resolution of the Wal-Mart investigation harmful to compliance officers and the public.
Below is a draft letter to the DOJ and SEC. I invite comments and suggestions from readers of the FCPA Blog so that this letter might speak for members of the compliance community everywhere.
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Office of the Assistant Attorney General
U.S. Department of Justice
950 Pennsylvania Ave.
Washington, D.C. 205300
Office of Enforcement
U.S. Securities and Exchange Commission
100 F Street
Washington, D.C. 20549
Re: Wal-Mart Investigation
To the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”):
This letter expresses the concerns of many compliance professionals and others about the DOJ and SEC’s Wal-Mart investigation.
To be clear at the outset, the rights of Wal-Mart and all involved persons to due process, including the right to the presumption of innocence, should be respected and upheld during the investigation. Further, the right of the public to inquire into matters of public interest through our regulatory authorities, and to exercise rights of free press and freedom of association, should also be respected.
As to the ongoing investigation, the DOJ and SEC have allowed Wal-Mart to proceed by voluntary disclosures, as opposed to responding under subpoena. Wal-Mart is effectively investigating itself. Given the investigation’s lack of transparency to the public, can the DOJ and SEC explain why the investigation is adequate, and will you assure the public that the complete record will be released even if there is a case-closing settlement?
While all the facts are under investigation, the final disposition should address the allegations already in the public record. The public has been informed by, among other sources, Pulitzer prize-winning investigative journalism by the New York Times, ongoing media reporting, Wal-Mart’s regulatory filings and press releases, Congressional Committee announcements and several judicial proceedings.
From this public record, the DOJ and SEC should resolve the following:
· Did certain Wal-Mart executives implement a plan of corrupt means to secure improper business advantages, first in Mexico and later in China, India, Brazil and other countries?
· Wal-Mart’s compliance officers and professionals allegedly were intentionally obstructed by senior executives from conducting a compliance review and subjected to career-ending retaliation. If confirmed, will the DOJ and SEC’s settlement demonstrate that such harassment of compliance professionals is not condoned?
· Was there an intentional cover up of serious FCPA violations by senior executives? If so, what extraordinary sanctions will apply to deter similar serious criminal misconduct in the future?
· Due to alleged bribery and a cover up, did Wal-Mart’s books and records fail to meet applicable standards for complete and accurate accounting for over six years, 2005-2012?
· Will the DOJ and SEC prosecute any individuals for criminal misconduct? After two years of investigation, it appears no executives or officers will be prosecuted. Some charges are arguably not time barred, such as continuing books and records violations or conspiracy. The DOJ and SEC should either correct, or publicly explain, this gap in its prosecution.
· In a settlement, will Wal-Mart be allowed to retain and profit from improperly obtained stores in Mexico and elsewhere, while nothing is done to improve the countries where the alleged bribery took place? Instead will the DOJ and SEC and Wal-Mart create a new kind of settlement fund (already discussed in FCPA commentary on the FCPA Blog and elsewhere) that is administered by NGOs and strengthens anti-corruption institutions, such as investigative journalism and an independent judiciary?
I write for myself but also on behalf of many compliance professionals and others, especially those who live and work outside the United States, who share these views and lack the opportunity to express them publicly. We look forward to answers to these questions and a continuing public discussion.
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.