Bribery Tolerated as It Hurts Mexican Economy
Feds Said To Be Investigating Wal-Mart Bribery Scandal
The allegations were first described publicly in a weekend story in the New York Times.
A man pushes carriages outside of a Walmart store in Valley Stream, N.Y.Photograph by Spencer Platt/Getty Images.
A bombshell investigation by the New York Times reveals how Wal-Mart executives chose to end an internal bribery inquiry of the company’s Mexican subsidiary. Sergio Cicero Zapata, a former executive at Wal-Mart de Mexico, sent an e-mail to a company lawyer in 2005 describing how paying bribes to secure permits was common practice at the company’s largest foreign unit. The claims were difficult to ignore because Cicero reported lots of details, including names, dates, and bribe amounts.
It took mere days for company investigators to conclude that Cicero’s claims seemed credible as they reportedly uncovered a paper trail showing suspicious payments of more than $24 million. There was also evidence that top executives were well aware of the situation and went to great lengths to hide it from headquarters. But despite strong suspicion that laws had been broken, the company shut down the investigation, reports the New York Times’ David Barstow.
The investigators were criticized for being too aggressive and the inquiry was turned over to Wal-Mart de Mexico’s general counsel. A curious choice considering he was also suspected of wrongdoing. Unsurprisingly, he quickly exonerated his colleagues.
Wal-Mart released a statement saying it was “deeply concerned” about the allegations, emphasizing that it is currently investigating whether the company broke the law. The Times says the company only launched the investigation after it got word of the newspaper’s reporting.
A lawyer who specializes in the Foreign Corrupt Practices Act tells Reuters that Wal-Mart will likely try to convince U.S. authorities the problems were limited to Mexico. But it won’t be easy. “A corporate attitude toward the corruption there that allowed a cover-up to happen could signal wider compliance problems,” the lawyer said.