The New York Times has a long story about how, since revelations in late 2011 that the company had engaged in systemic and systematic bribery of Mexican officials to facilitate its growth there, a number of high-level executives who held critical positions during those events have departed from the company, "but no departure has been cited by Walmart as a way to clean house after those scandals."
It was the Times that first reported the bribery scandal:
"The federal investigation into Walmart’s global operations centers on whether the company violated the Foreign Corrupt Practices Act, a law that prohibits companies from bribing foreign officials. The Times reported in 2012 that Walmart consistently bribed public officials in Mexico for things like building permits to speed its expansion in that country. Executives at company headquarters in Bentonville learned of those supposed misdeeds in 2005 but subsequently shut down an internal investigation instead of reporting potential violations of the law to the United States government."
Here is how the Times frames the new story:
"While the investigations are still pending, Walmart has substantively changed its compliance structure and personnel, at times with great fanfare and at others without a whisper.
"While the circumstances surrounding each executive’s departure are unclear, a pattern has emerged. At least eight of Walmart’s most senior executives in Mexico, India and Bentonville, Ark., have left the company since the latter part of 2011, when Walmart learned of The Times’s investigation. In the same two years, the company has revamped its global compliance program. In a move that swims against the current of Walmart’s corporate culture, the company has increased its compliance staff by more than 30 percent, to 2,000 people, in that short time.
"Other changes the company has made - including mandating that any potential foreign corruption violations be reported to corporate headquarters and the board - may make it more difficult for senior executives to plead ignorance in the future.
"It is in Walmart’s interest, particularly as it negotiates with federal prosecutors, to show how it has strengthened its compliance efforts." However, the new Times story makes the point that while Walmart has reported spending more than $400 million on its internal investigations, compliance programs and related legal costs (though, to be fair, the US Department of Justice has never officially confirmed or denied a probe into the Walmart bribery allegations), there are those who suggest that its compliance moves have been perfunctory or "window dressing."
Fascinating story, and you can read the entire piece here (though you may be a Times subscriber to do so).
It was the Times that first reported the bribery scandal:
"The federal investigation into Walmart’s global operations centers on whether the company violated the Foreign Corrupt Practices Act, a law that prohibits companies from bribing foreign officials. The Times reported in 2012 that Walmart consistently bribed public officials in Mexico for things like building permits to speed its expansion in that country. Executives at company headquarters in Bentonville learned of those supposed misdeeds in 2005 but subsequently shut down an internal investigation instead of reporting potential violations of the law to the United States government."
Here is how the Times frames the new story:
"While the investigations are still pending, Walmart has substantively changed its compliance structure and personnel, at times with great fanfare and at others without a whisper.
"While the circumstances surrounding each executive’s departure are unclear, a pattern has emerged. At least eight of Walmart’s most senior executives in Mexico, India and Bentonville, Ark., have left the company since the latter part of 2011, when Walmart learned of The Times’s investigation. In the same two years, the company has revamped its global compliance program. In a move that swims against the current of Walmart’s corporate culture, the company has increased its compliance staff by more than 30 percent, to 2,000 people, in that short time.
"Other changes the company has made - including mandating that any potential foreign corruption violations be reported to corporate headquarters and the board - may make it more difficult for senior executives to plead ignorance in the future.
"It is in Walmart’s interest, particularly as it negotiates with federal prosecutors, to show how it has strengthened its compliance efforts." However, the new Times story makes the point that while Walmart has reported spending more than $400 million on its internal investigations, compliance programs and related legal costs (though, to be fair, the US Department of Justice has never officially confirmed or denied a probe into the Walmart bribery allegations), there are those who suggest that its compliance moves have been perfunctory or "window dressing."
Fascinating story, and you can read the entire piece here (though you may be a Times subscriber to do so).
- KC's View:
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I've been carping here for some time about how long it seems to be taking for the feds to complete their probe, but the Times piece does assuage my anxiety a bit on this one, suggesting that probes into violations of the Foreign Corrupt Practices Act often can take years.
It is interesting that so many top execs who may have known about the bribery practices have left the company, though Walmart denies that there is any connection. The one thing new CEO Doug McMillon needs to do, I think, is make sure that if and when the accusations really hit the fan and become something more - like indictments - he's got a clearly defined path on which to take the company … and that includes anticipating legal issues by moving pieces around the board to insure the greatest possible deniability and show some credible level of penitence.
