Wal-Mart: Checking Into Mexican Corruption Claims
First Published Saturday, 21st April 2012 10:02 pm - © 2012 Dow Jones
Wal-Mart Stores Inc. (WMT) said Saturday it is looking into a newspaper's claims that employees at a subsidiary bribed Mexican officials over several years and that executives at its headquarters in the U.S. shut down any thorough investigation of the allegations.
Wal-Mart, the world's largest retailer, said in a lengthy statement it has told federal authorities about the matter and that its outside investigators will continue to meet with officials from the Department of Justice and Securities & Exchange Commission.
"We will not tolerate noncompliance with [the Foreign Corrupt Practices Act] anywhere or at any level of the company," David Tovar, vice president of corporate communications at Wal-Mart, said in the statement.
Tovar said an audit committee and outside advisers "have at their disposal all the resources they may need to pursue a comprehensive and thorough investigation."
Tovar declined to comment beyond the statement.
The thrust of the claims made by the New York Times was that in 2005 executives at Wal-Mart's Bentonville, Ark., headquarters heard allegations of bribery of Mexican officials, possibly totaling $24 million over hundreds of payments, but didn't discipline leaders at Wal-Mart de Mexico (WALMEX.MX, WMMVY) or notify U.S. or Mexican law-enforcement officials.
Senior executives, said the Times, "focused more on damage control than on rooting out wrongdoing."
The Times reported an investigation into the Mexico bribery claims was put mainly in the hands of Wal-Mart's general counsel in Mexico--the man accused of authorizing the bribes--while the executive who allegedly oversaw the bulk of the bribes, Eduardo Castro-Wright, was promoted to Wal-Mart vice chairman in 2008. Castro-Wright announced plans in September to retire from the company.
The Times also reported that Wal-Mart's then-Chief Executive Lee Scott scolded internal investigators at the time for being too aggressive, while current CEO Michael Duke knew of the claims.
"Many of the alleged activities in the New York Times article are more than six years old," Tovar said in the statement. "If these allegations are true, it is not a reflection of who we are or what we stand for."
"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," Tovar added.
"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."
Tovar noted in his statement Wal-Mart had informed shareholders of the investigation in a December filing. The SEC filing said Wal-Mart didn't believe the claims "will have a material adverse effect on our business."
The Times's story, however, said there is "credible evidence that bribery played a persistent and significant role in Wal-Mart's rapid growth in Mexico."
Wal-Mart is Mexico's largest private employer, the paper said, with 209,000 workers in the country.
Tovar said Wal-Mart recently tightened its internal controls, hiring a U.S. Foreign Corrupt Practices Act compliance director in Mexico who reports directly to executives in Bentonville.
"In the spring of 2011, we initiated a worldwide review of our anticorruption program," Tovar said. "We are taking a deep look at our policies and procedures in every country in which we operate."
"In a large global enterprise such as Wal-Mart, sometimes issues arise despite our best efforts and intentions," he added. "When they do, we take them seriously and act as quickly as possible to understand what happened... That's what we're doing today."
-By Sam Mamudi; 415-439-6400; AskNewswires@dowjones.com
--Karen Talley of Dow Jones Newswires contributed to this article.