The Bribery Aisle: How Walmart Got Its Way in Mexico
The NYT investigation reports that “Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.”
The NYT article comes in the wake of Walmart’s announcement that they were widening a self-probe of bribery and corruption problems to include Brazil, China, South Africa and India.
Authorities in India are already investigating Wal-Mart for possible violations of foreign investment rules, relating to a $100 million payment there.
The Justice Department and the Securities and Exchange Commission are investigating Walmart’s possible cover-up and violations of the Foreign Corrupt Practices Act, the federal law that makes it a crime for American corporations or their subsidiaries to bribe foreign officials. Mexican authorities and Congressional Democrats have also begun investigations, and Wal-Mart has been hit by shareholder lawsuits from several major pension funds.
Violations of the Foreign Corrupt Practices Act carry penalties of fines of up to $5 million and up to 20 years in prison, but the FCPA has a five year statute of limitations. Knowledge of the Mexican bribery scandal reached company headquarters in September 2005, but Walmart executives shut down the internal investigation until November 2011 when they learned of the NYT investigation underway.
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