NY Times: Walmart hushed up bribery in Mexico | Arkansas Blog

NY Times: Walmart hushed up bribery in Mexico



The New York Times has posted a big one for the Sunday paper, an investigative report that says, after uncovering use of bribery to dominate the Mexican market in 2005, Arkansas-based retailing giant Walmart took steps to cover it all up. The article says the company was more concerned with damage control than rooting out wrongdoing.

This is a big, very bad deal that reaches to the very highest ranks of Walmart, including the former CEO, H. Lee Scott, and the former director of the Arkansas State Police, Tom Mars, who was general counsel of the company in 2005 and is now executive vice president and chief administrative officer. Board chair and Walton heir Rob Walton reportedly received an e-mail about the bribery in 2008. Covering up employees' involvement in illegal activity is a different order of problem than, say, spreading money around to wine and dine or elect legislators or treating a few women in ways different than men in hiring and employment.

In one meeting where the bribery case was discussed, H. Lee Scott Jr., then Wal-Mart’s chief executive, rebuked internal investigators for being overly aggressive. Days later, records show, Wal-Mart’s top lawyer arranged to ship the internal investigators’ files on the case to Mexico City. Primary responsibility for the investigation was then given to the general counsel of Wal-Mart de Mexico — a remarkable choice since the same general counsel was alleged to have authorized bribes.

The general counsel promptly exonerated his fellow Wal-Mart de Mexico executives. [CORRECTION: My original post said this was a reference to Tom Mars. It was a reference to Jose Louis Rodfiruezmacedo Rivera—the Wal-Mart de Mexico General Counsel—not Tom Mars.]

When Wal-Mart’s director of corporate investigations — a former top F.B.I. official — read the general counsel’s report, his appraisal was scathing. “Truly lacking,” he wrote in an e-mail to his boss.

The report was nonetheless accepted by Wal-Mart’s leaders as the last word on the matter.

Walmart's response reached me before the NY Times' daily e-mail on its Sunday stories did — old news, but a new investigation is ongoing and the company is concerned, committed to integrity and yadda yadda yadda: It follows:

BENTONVILLE, Ark., April 21, 2012 — The following statement can be attributed to David Tovar, Vice President, Corporate Communications.

“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;
internal controls;
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.”

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