Each Black Friday we hear all about Walmart on the evening news, from the jaw-dropping discounts to the deaths by trampling. This year, we've been hearing about coordinated strikes, walk-outs and protests as Walmart workers have begun to resent the depths of their corporate exploitation. But we don't hear about the rampant corruption uncovered in Walmart's foreign expansion as multiple bribery probes widen.
Walmart is the biggest retailer in known history, employing one million US workers and making $3.63 billion in profits just in the most recent quarter. Obviously, a business this size will hold a lot of sway in media where they are regular advertisers. Maybe that's why our TV news missed a global bribery scandal which could lead to perp walks, but so far, is barely being reported.
Kudos to the Boston Globe for updating the story that David Barstow broke on the front page of the New York Times last April. In brief, it presented evidence Walmart had systematically bribed officials to fast-track expansion in Mexico.
After a 10 year Walmart official blew the whistle, an internal investigation ordered by Walmart's top executives buried the affair for some seven years. How? They simply made an official involved in the allegations responsible for the investigation. Not surprisingly, he reported no wrongdoing. Management even promoted the chief executive of the Mexican division to vice chairman.
This alleged cover-up implicates senior management including two CEOs who knew - or should have known - their financial records showed millions in payments for local "gestores", Mexican officials who greased the wheels in obtaining permits, zoning approvals and environmental waivers. Cutting through bureaucratic red tape, Walmart's explosive growth "south of the border" quickly made them also Mexico's largest private employer with over 2,000 new stores opening in 12 years.
The SEC and DOJ are finally taking an interest in the matter, but Walmart was already able to get way out "in front" of US law enforcement. Records that could have been seized and subpoenaed after the 4/22/12 NY Times bombshell are being handled by Walmart "internal compliance" including 300 lawyers and accountants, a noted former FBI official and "experts" on foreign corruption prosecutions. Criticized for stalling, Walmart spent $100 million so far this year on damage control.
To remind readers (in the public interest), a bribe made to a foreign official is a violation of the Foreign Corrupt Practices Act.
Broadcasters from Sean Hannity to Rachel Maddow and everyone in between missed this major story raging in the print and financial press, even as Walmart admitted last week that they are preparing responses to allegations of FCPA crimes in Mexico.
Walmart naturally wants holiday shoppers to be insulated from bad PR. But their own investigators quickly found the same "model" for rapid foreign expansion was also used in Brazil, China and India where hundreds more stores opened and many more were in planning.
It's no secret that bribes are common in the developing world, but US companies are bound to strict federal laws. The Securities and Exchange Commission just last week published fresh, clear cut guidelines for interpreting the FCPA to spell out what constitutes an illegal bribe. Walmart's admissions came one day later. It's as if the SEC knew the NYT piece was going to cause a legal shitstorm and fired the first shot.
An intense legal battle is shaping up between the US government and the richest family in the US, literally.
Since burying their first internal investigation, Walmart is this time pledging new oversight including background checks for intermediaries. They have suspended a handful of workers from their India division, but they will likely try to protect top management.
This could be tough because current CEO Michael Duke and former CEO Lee Scott both signed documents affirming any evidence suggesting fraud was properly disclosed. As last week's disclosures show...not so much.
It's not how or when Obama/Holder will react but IF.
Barstow's bombshell describes a wealth of first-hand evidence pointing squarely to upper management, drunk with greed as foreign expansion boomed.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
2
1
