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Wal-Mart may have covered up bribery in Mexico

New York Times article says the world’s largest retailer hid FCPA violations

It’s bad enough that Wal-Mart de Mexico allegedly engaged in criminal activity to expedite its expansion throughout the country south of the border by paying bribes to Mexican officials, but when those allegations came to light at its parent company, Wal-Mart, the world’s largest retailer, swept it under the rug. At least, that’s what a New York Times article published over the weekend claims.

According to the article, “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” a senior lawyer at Wal-Mart received an email in 2005 from a former Wal-Mart de Mexico executive, claiming the company engaged in rampant Foreign Corrupt Practices Act (FCPA) violations in an effort to win market dominance. The investigation, which immediately followed the allegations, uncovered a long trail of potentially illegal payments totaling more than $24 million.

Although the recommended next step by the lead investigator was naturally to broaden the investigation, Wal-Mart slammed on the brakes. According to the article, the company didn’t notify American or Mexican law enforcement officials, it didn’t reprimand any of the executives involved in the potentially illegal activity, and it went on to promote one executive who was named as the driving force behind the corruption to vice chair several years later. In fact, the New York Times story was the  first time any of this information was made public.

“Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show,” the article explained. “Wal-Mart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing.”

The New York Times article, which is almost 8,000 words long, goes on to describe in detail the series of events that followed.

 

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Cathleen Flahardy

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