There is more news in the Walmart bribery scandal, which first came to light over the weekend when the New York Times provided an inside look at Walmart’s Mexico division, suggesting that its fast growth over the past decade was fueled by bribes, and that top management was more concerned with details not being revealed and investigations not being allowed to move forward than it was with stopping the systematic corruption and adhering to US law that forbids American companies from bribing foreign officials.
• Reuters reports that Mexico’s federal comptroller has opened a probe into Walmart’s business practices there, “checking the federal paperwork and permits that Wal-Mart de Mexico, known as Walmex, obtained to open and operate its stores in Mexico ... The comptroller's office said it would ask U.S. authorities for information on the case in order to carry out its investigation and that the federal government would take action if wrongdoing by public officials was detected.”
As the story notes, “Wal-Mart already faces a criminal probe by the U.S. Department of Justice over potential violations of the Foreign Corrupt Practices Act (FCPA), a U.S. law that forbids bribing foreign officials.”
• Forbes reports that the Mexican government yesterday “approved the nation’s first anti-corruption law. The move appeared orchestrated to coincide with the Mexico comptroller’s office announcement 24 hours earlier that it will investigate the widening bribery case, caving into international and local anti-corruption officials and politician’s pressure that it must get to the bottom of it.”
The consensus seems to be that the Mexican government has to confront the Walmart case head-on, because “failing to do so will scare foreign investors away from the country, which is already suffering from heavy drug-related crime.”
• Bloomberg Business Week has a piece suggesting that Walmart’s Mexico problems could put its broader international plans “in peril,” which could great other issues for the retailer, which has been using global growth as a way to compensate for stagnant sales in the US.
Indeed, it isn’t Mexico creating global headaches for Walmart. It also has had issues in China, where the government shut down 13 stores for two weeks because they mislabeled pork, and there have been other criticisms about selling out-of-date merchandise. In addition, the Indian government recent bowed to populist pressure and reversed a ruling that would have allowed Walmart to open stores there.
Furthermore, Walmart had to pull out of Germany in 2006 after it was unable to get any traction there, and Japan has never been the kind of runaway success that the company hoped it would be.
• Bloomberg Business Week also reports that dealing with the bribery allegations could end up costing Walmart hundreds of millions of dollars, especially if the investigation spreads to other countries where Walmart has expanded or is trying to expand.
• Here’s one from the Department of Irony...
Salon reports that Walmart senior executive Eduardo Castro-Wright, who has been implicated in the Mexico bribery scandal, had an interesting role when he served on the board of Met Life (from which he stepped down this week amid all the controversy.).
Castro-Wright last year was paid more than a quarter-million dollars as “a member of MetLife’s Governance and Corporate Responsibility Committee,” Salon writes, which had as its responsibility overseeing “the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards.”
• And another one from the Department of Irony file... One MNB user sent me a note yesterday pointing out that down in Arkansas, as part of the ‘Doing Business in Bentonville” speaker series, former Walmart senior vice chairman/COO Don Soderquist will be speaking on May 16.
Soderquist is the founding executive of The Soderquist Center for Leadership and Ethics,and one of the promotional lines about his speech says:
Don firmly believes that business ethics are not a luxury, but an essential element in creating high-performance organizations; he also knows that the responsibility for creating an ethical organization belongs to its senior leaders.
• Reuters reports that Mexico’s federal comptroller has opened a probe into Walmart’s business practices there, “checking the federal paperwork and permits that Wal-Mart de Mexico, known as Walmex, obtained to open and operate its stores in Mexico ... The comptroller's office said it would ask U.S. authorities for information on the case in order to carry out its investigation and that the federal government would take action if wrongdoing by public officials was detected.”
As the story notes, “Wal-Mart already faces a criminal probe by the U.S. Department of Justice over potential violations of the Foreign Corrupt Practices Act (FCPA), a U.S. law that forbids bribing foreign officials.”
• Forbes reports that the Mexican government yesterday “approved the nation’s first anti-corruption law. The move appeared orchestrated to coincide with the Mexico comptroller’s office announcement 24 hours earlier that it will investigate the widening bribery case, caving into international and local anti-corruption officials and politician’s pressure that it must get to the bottom of it.”
The consensus seems to be that the Mexican government has to confront the Walmart case head-on, because “failing to do so will scare foreign investors away from the country, which is already suffering from heavy drug-related crime.”
• Bloomberg Business Week has a piece suggesting that Walmart’s Mexico problems could put its broader international plans “in peril,” which could great other issues for the retailer, which has been using global growth as a way to compensate for stagnant sales in the US.
Indeed, it isn’t Mexico creating global headaches for Walmart. It also has had issues in China, where the government shut down 13 stores for two weeks because they mislabeled pork, and there have been other criticisms about selling out-of-date merchandise. In addition, the Indian government recent bowed to populist pressure and reversed a ruling that would have allowed Walmart to open stores there.
Furthermore, Walmart had to pull out of Germany in 2006 after it was unable to get any traction there, and Japan has never been the kind of runaway success that the company hoped it would be.
• Bloomberg Business Week also reports that dealing with the bribery allegations could end up costing Walmart hundreds of millions of dollars, especially if the investigation spreads to other countries where Walmart has expanded or is trying to expand.
• Here’s one from the Department of Irony...
Salon reports that Walmart senior executive Eduardo Castro-Wright, who has been implicated in the Mexico bribery scandal, had an interesting role when he served on the board of Met Life (from which he stepped down this week amid all the controversy.).
Castro-Wright last year was paid more than a quarter-million dollars as “a member of MetLife’s Governance and Corporate Responsibility Committee,” Salon writes, which had as its responsibility overseeing “the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards.”
• And another one from the Department of Irony file... One MNB user sent me a note yesterday pointing out that down in Arkansas, as part of the ‘Doing Business in Bentonville” speaker series, former Walmart senior vice chairman/COO Don Soderquist will be speaking on May 16.
Soderquist is the founding executive of The Soderquist Center for Leadership and Ethics,and one of the promotional lines about his speech says:
Don firmly believes that business ethics are not a luxury, but an essential element in creating high-performance organizations; he also knows that the responsibility for creating an ethical organization belongs to its senior leaders.
- KC's View:
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Maybe it is time to bring Soderquist out of retirement to restore a little luster and ethical credibility to a tarnished brand.
This drumbeat of news is going to continue for the foreseeable future, and Walmart is simply going to have to deal with it. The question is when the drumbeat gets so loud - and the costs to its reputation and bank account so severe - that the only way to stop it is to start making wholesale changes at the top of the executive ladder.
