-
Hey, guys! FreeOnes Tube is up and running - see for yourself!
-
FreeOnes Now Listing Male and Trans Performers! More info here!
Wal-Mart silenced Mexico bribe inquiry
- Thread starter Rey C.
- Start date
Wal-Mart probe could cost some executives their jobs
(Reuters) - Allegations that Wal-Mart Stores Inc stymied an internal investigation into extensive bribery at its Mexican subsidiary are likely to lead to years of regulatory scrutiny and could eventually cost some executives their jobs.
The New York Times reported on Saturday that in September 2005, a senior Wal-Mart lawyer received an email from Sergio Cicero Zapata, a former executive at the company's largest foreign unit, Wal-Mart de Mexico, describing how the subsidiary had paid bribes to obtain permits to build stores in the country.
Wal-Mart sent investigators to Mexico City and found a paper trail of hundreds of suspect payments totaling more than $24 million, but the company's leaders shut down the investigation and neglected to notify U.S. or Mexican law enforcement officials, the Times reported.
Legal and retail experts said that the allegations, if proven true, could badly hamper the company and its management for years. They could lead to a time-consuming global probe, substantial financial penalties paid to U.S. authorities, and the departure of some executives.
One option Wal-Mart will have is to remove some of those involved in the alleged bribery or cover-up as this could make it easier to reach an out-of-court settlement with the U.S. Department of Justice concerning possible breaches of the Foreign Corrupt Practices Act (FCPA), a U.S. law that forbids the payment of bribes to foreign government officials.
"Among the remedial actions is 'house cleaning' of anyone involved in illegal conduct," said Richard Cassin, a lawyer who is an expert on the FCPA and writes a blog about it. "If a company can say those involved in the questionable conduct are already gone, the DOJ is likely to look more favorably on the company and current management."
Wal-Mart said it had disclosed its probe to the DOJ and the Securities and Exchange Commission. The company also said it had taken steps at the Mexico unit, which is widely known as Walmex, to boost internal controls to make sure it was FCPA compliant.
But, according to the Times, the disclosure came only after it informed Wal-Mart that it was looking into the bribery allegations, years after the bribes were said to first come to management's attention.
A spokesman at the SEC said on Saturday he did not have any comment on the Times article. A DOJ spokeswoman declined to comment.
"Because of Wal-Mart's inaction for a very long time, it's likely its exposure is only going to increase," said Michael Koehler, a professor at Butler University and an expert on the FCPA.
According to the Times, current Wal-Mart Chief Executive Mike Duke and former CEO Lee Scott, who still sits on the company's board, were among senior executives allegedly aware of the situation. Duke was put in charge of Wal-Mart's international division in 2005.
"DEEPLY CONCERNED"
The newspaper also reported that the whistleblower Cicero had identified former Walmex CEO Eduardo Castro-Wright as the driving force behind years of bribery.
Castro-Wright became CEO of Walmex in 2003 and was named CEO of Walmart US in 2005 and became a vice chairman in 2008. He led Wal-Mart's e-commerce business from 2010 until January this year, and is set to retire on July 1 after the company said last September that he was going to leave to spend more time with his family. He could not be reached for comment.
Wal-Mart said in a statement on Saturday it was "deeply concerned" about the allegations in the Times report. It said it began an investigation into its compliance with anti-bribery laws last autumn. The company declined to make Duke or any other executives available for comment, and said the investigation was continuing.
On Sunday, Wal-Mart spokesman David Tovar said Duke had instructed the company to conduct a worldwide FCPA compliance review in March 2011.
"Mike is fully supportive of the independent investigation being conducted in Mexico with oversight by the Audit Committee, including ensuring that all resources necessary are available to pursue the independent investigation aggressively," Tovar said.
On Friday, Walmex announced that one executive named the next day in the Times report, its general counsel and secretary to the board Jose Luis Rodriguezmacedo, had been assigned to other duties. He was removed from his role "in the interest of the investigation," Walmex spokesman Antonio Ocaranza said in an email, adding that he could not give further details about Rodriguezmacedo's status at Walmex. Calls to Rodriguezmacedo were referred to the spokesman.
COSTLY AND FAR-REACHING
Experts in bribery laws said Wal-Mart will be forced to devote millions of dollars and enormous amounts of manpower to its internal investigation. In many FCPA cases involving large companies, they do a large part of the investigation themselves and then hand the results over to the authorities.
"This is very likely to last two to four years for Walmart. These worldwide investigations tend to take two to four years in the normal course of business; it simply takes time," said Koehler.
Cassin said Wal-Mart faces an uphill battle to convince U.S. regulators that its problems are confined to Mexico. The U.S. retailer also has major operations in the UK, Brazil, Japan, China and Canada, and it is also seeking to expand rapidly in emerging markets such as India and parts of Africa.
"Before any resolution with U.S. authorities is possible, the company has to look under every stone for possible corruption. Are there any similar issues in China or other countries? That's what U.S. authorities will want to know. Wal-Mart's shareholders will be asking the same question," said Cassin.
The allegations could prove a huge problem for Wal-Mart if proven true, said Deutsche Bank retail analyst Charles Grom. "It would put a broadside in the growth engine of the company," he said. "Unlike prior bad PR stories in recent years, this will be a material distraction for Wal-Mart on multiple fronts."
Some retail experts said they thought that Wal-Mart would be unlikely to sacrifice Duke in the investigation and any related talks over a settlement with the government.
"I don't get the sense that Mike Duke's going to lose his job over this," said Joseph Feldman, senior retail analyst at Telsey Advisory Group. "I think that they'll try to put the spin on it that they have been putting on it - that it happened years ago, they rooted it out and it doesn't happen anymore."
The company's corporate structure may also reduce the chances of outside pressure from shareholder activists and others leading to drastic changes in the executive suite. The family of Wal-Mart founder Sam Walton owns nearly 50 percent of the shares and Walton's eldest son, S. Robson (Rob) Walton, is chairman, and his younger brother Jim is also on the board.
According to the Times, Rob Walton, Duke and Scott also had received an anonymous email in January 2006 saying Wal-Mart de Mexico's top real estate executives were receiving kickbacks from construction companies.
IMAGE STRUGGLES
Wal-Mart, which employs 2.2 million people and runs more than 10,000 stores around the world, is often targeted by labor and community activists who argue that it underpays its workers and its sprawling stores undercut smaller shops, often putting them out of business. It has fought hard to improve its image in recent years with a number of campaigns, including one to make its operations more environmentally friendly.
Wal-Mart executives have, though, been active in a lobbying group that is pushing to scale back the FCPA. A 2010 tax return for the U.S. Chamber Institute for Legal Reform lists Jeff Gearhart, Wal-Mart's general counsel since 2009, and Thomas Hyde, who retired in August 2010 as Wal-Mart corporate secretary, as two of 40 people who served as board members.
The board includes top lawyers and executives from other major corporations. Dow Chemical Co, Exxon Mobil Corp and State Farm Insurance each had two people among the 40 listed board members during 2010.
The U.S. Chamber Institute for Legal Reform is associated with the U.S. Chamber of Commerce, the largest business lobbying organization in Washington, D.C. It wants lawmakers to make several changes to the corruption law, for example by adding a provision that would protect a corporation from liability if one of its employees circumvented compliance measures.
http://finance.yahoo.com/news/wal-mart-probe-could-cost-034033891.html
(Reuters) - Allegations that Wal-Mart Stores Inc stymied an internal investigation into extensive bribery at its Mexican subsidiary are likely to lead to years of regulatory scrutiny and could eventually cost some executives their jobs.
The New York Times reported on Saturday that in September 2005, a senior Wal-Mart lawyer received an email from Sergio Cicero Zapata, a former executive at the company's largest foreign unit, Wal-Mart de Mexico, describing how the subsidiary had paid bribes to obtain permits to build stores in the country.
Wal-Mart sent investigators to Mexico City and found a paper trail of hundreds of suspect payments totaling more than $24 million, but the company's leaders shut down the investigation and neglected to notify U.S. or Mexican law enforcement officials, the Times reported.
Legal and retail experts said that the allegations, if proven true, could badly hamper the company and its management for years. They could lead to a time-consuming global probe, substantial financial penalties paid to U.S. authorities, and the departure of some executives.
One option Wal-Mart will have is to remove some of those involved in the alleged bribery or cover-up as this could make it easier to reach an out-of-court settlement with the U.S. Department of Justice concerning possible breaches of the Foreign Corrupt Practices Act (FCPA), a U.S. law that forbids the payment of bribes to foreign government officials.
"Among the remedial actions is 'house cleaning' of anyone involved in illegal conduct," said Richard Cassin, a lawyer who is an expert on the FCPA and writes a blog about it. "If a company can say those involved in the questionable conduct are already gone, the DOJ is likely to look more favorably on the company and current management."
Wal-Mart said it had disclosed its probe to the DOJ and the Securities and Exchange Commission. The company also said it had taken steps at the Mexico unit, which is widely known as Walmex, to boost internal controls to make sure it was FCPA compliant.
But, according to the Times, the disclosure came only after it informed Wal-Mart that it was looking into the bribery allegations, years after the bribes were said to first come to management's attention.
A spokesman at the SEC said on Saturday he did not have any comment on the Times article. A DOJ spokeswoman declined to comment.
"Because of Wal-Mart's inaction for a very long time, it's likely its exposure is only going to increase," said Michael Koehler, a professor at Butler University and an expert on the FCPA.
According to the Times, current Wal-Mart Chief Executive Mike Duke and former CEO Lee Scott, who still sits on the company's board, were among senior executives allegedly aware of the situation. Duke was put in charge of Wal-Mart's international division in 2005.
"DEEPLY CONCERNED"
The newspaper also reported that the whistleblower Cicero had identified former Walmex CEO Eduardo Castro-Wright as the driving force behind years of bribery.
Castro-Wright became CEO of Walmex in 2003 and was named CEO of Walmart US in 2005 and became a vice chairman in 2008. He led Wal-Mart's e-commerce business from 2010 until January this year, and is set to retire on July 1 after the company said last September that he was going to leave to spend more time with his family. He could not be reached for comment.
Wal-Mart said in a statement on Saturday it was "deeply concerned" about the allegations in the Times report. It said it began an investigation into its compliance with anti-bribery laws last autumn. The company declined to make Duke or any other executives available for comment, and said the investigation was continuing.
On Sunday, Wal-Mart spokesman David Tovar said Duke had instructed the company to conduct a worldwide FCPA compliance review in March 2011.
"Mike is fully supportive of the independent investigation being conducted in Mexico with oversight by the Audit Committee, including ensuring that all resources necessary are available to pursue the independent investigation aggressively," Tovar said.
On Friday, Walmex announced that one executive named the next day in the Times report, its general counsel and secretary to the board Jose Luis Rodriguezmacedo, had been assigned to other duties. He was removed from his role "in the interest of the investigation," Walmex spokesman Antonio Ocaranza said in an email, adding that he could not give further details about Rodriguezmacedo's status at Walmex. Calls to Rodriguezmacedo were referred to the spokesman.
COSTLY AND FAR-REACHING
Experts in bribery laws said Wal-Mart will be forced to devote millions of dollars and enormous amounts of manpower to its internal investigation. In many FCPA cases involving large companies, they do a large part of the investigation themselves and then hand the results over to the authorities.
"This is very likely to last two to four years for Walmart. These worldwide investigations tend to take two to four years in the normal course of business; it simply takes time," said Koehler.
Cassin said Wal-Mart faces an uphill battle to convince U.S. regulators that its problems are confined to Mexico. The U.S. retailer also has major operations in the UK, Brazil, Japan, China and Canada, and it is also seeking to expand rapidly in emerging markets such as India and parts of Africa.
"Before any resolution with U.S. authorities is possible, the company has to look under every stone for possible corruption. Are there any similar issues in China or other countries? That's what U.S. authorities will want to know. Wal-Mart's shareholders will be asking the same question," said Cassin.
The allegations could prove a huge problem for Wal-Mart if proven true, said Deutsche Bank retail analyst Charles Grom. "It would put a broadside in the growth engine of the company," he said. "Unlike prior bad PR stories in recent years, this will be a material distraction for Wal-Mart on multiple fronts."
Some retail experts said they thought that Wal-Mart would be unlikely to sacrifice Duke in the investigation and any related talks over a settlement with the government.
"I don't get the sense that Mike Duke's going to lose his job over this," said Joseph Feldman, senior retail analyst at Telsey Advisory Group. "I think that they'll try to put the spin on it that they have been putting on it - that it happened years ago, they rooted it out and it doesn't happen anymore."
The company's corporate structure may also reduce the chances of outside pressure from shareholder activists and others leading to drastic changes in the executive suite. The family of Wal-Mart founder Sam Walton owns nearly 50 percent of the shares and Walton's eldest son, S. Robson (Rob) Walton, is chairman, and his younger brother Jim is also on the board.
According to the Times, Rob Walton, Duke and Scott also had received an anonymous email in January 2006 saying Wal-Mart de Mexico's top real estate executives were receiving kickbacks from construction companies.
IMAGE STRUGGLES
Wal-Mart, which employs 2.2 million people and runs more than 10,000 stores around the world, is often targeted by labor and community activists who argue that it underpays its workers and its sprawling stores undercut smaller shops, often putting them out of business. It has fought hard to improve its image in recent years with a number of campaigns, including one to make its operations more environmentally friendly.
Wal-Mart executives have, though, been active in a lobbying group that is pushing to scale back the FCPA. A 2010 tax return for the U.S. Chamber Institute for Legal Reform lists Jeff Gearhart, Wal-Mart's general counsel since 2009, and Thomas Hyde, who retired in August 2010 as Wal-Mart corporate secretary, as two of 40 people who served as board members.
The board includes top lawyers and executives from other major corporations. Dow Chemical Co, Exxon Mobil Corp and State Farm Insurance each had two people among the 40 listed board members during 2010.
The U.S. Chamber Institute for Legal Reform is associated with the U.S. Chamber of Commerce, the largest business lobbying organization in Washington, D.C. It wants lawmakers to make several changes to the corruption law, for example by adding a provision that would protect a corporation from liability if one of its employees circumvented compliance measures.
http://finance.yahoo.com/news/wal-mart-probe-could-cost-034033891.html
Rey C.
Racing is life... anything else is just waiting.
Yeah, that's kind of how it is these days, huh? :dunno:
I don't care if the plastic spoon set I just bought at Wally World was made by a 6 year old girl with a bayonet pointed at her ass, as long as I can get it for 27 cents (including tax!), I'm all good. Bribe away! Just keep my prices down. It's the new American way, doncha know?!
everything is so screwed ...nothing surprises me anymore!!!!
It's a well-known fact that to get anywhere in Mexico you have to give a mordida to someone in charge. Having said that, FUCK WAL-MART!!!
Mall-Wart already operates in China. Ironically, that's the only place where it allows workers to be associated with unions. That doesn't really say much, though, as they are government-run unions. Kind of defeats the purpose of trade unionism. As I've said a thousand times before, fuck Wal-Mart, and fuck China! :thefinger
Kingfisher
Here Zombie, Zombie, Zombie...
So you're saying there's corruption in business? Color me shocked.
LeyaFalcon
Official Checked Star Member
I didn't even know they had wl mart outside of the us...ehhhh I prefer target anyways
:ban:
That's what you get for shopping at a place that kills American jobs by sending them to some shithole in China in order to get virtually free slave labor, and then forces independent businesses to close their doors in the US by selling their substandard pieces of Chinese shit at prices so low that the local businesses can't afford to keep their doors open. Top it off with the cherry of exploiting their American employees and paying them peanuts, and you have one big, happy (Walton) family.
No, those are my nuts you have in your mouth.
squallumz
knows petras secret: she farted.
man, if so, im going to have to start giving you more blowjobs. this cream cheese is amazing!
:1orglaugh
If Sam were alive today he'd be worth roughly TWICE as much as the richest man in the world. He was SELF MADE. I am fascinated by the man and have his biography and even consider him one of the few people I idol me being somewhat of a businessman myself.
But I have to say I do not like Wal-Mart anymore. They are ruthless and are doing far more damage than good today. Give me Target over them any day of the week. Heck even K-Mart is better IMO.
I hope this scandal does hurt the store but they are far too powerful to be long-term hurt. BTW, California are one of the few (only???) places where the Wal-Mart workers (some, at least) are unionized.
I'm not sure where you got your information, but you should check your sources because they are wrong. ESPECIALLY in California, Mall-Wart doesn't want their workers unionizing. When I got hired at Sam's Club we were told that we would be watching a bunch of instructional videos for our orientation. For some reason or another the session ran late and we didn't have time to watch most of the videos that were supposed to. Curiously enough, the one video that we did have time to watch was the one on unions. It talked about how the evil unions just want to take employees' hard-earned money and not do anything in return, and how they interfere in allowing the company to have great benefits for their employees (health care after 2 years for part-time employees, which EVERYONE who gets a job there is at some point or another (their policy says that it's 6 months for full-time employees, and 2 years for part-time employees to have medical benefits, but if your status changes before you're on the health plan your time resets back to 0. The way they work it is that you're part-time for a year and a half, then they make you full-time, which shouldn't make a difference because you had 6 months before you could get benefits anyway, but then after 5 months they tell you that there is not enough work in your department to have you working full-time, so they're bumping you back to part-time, and voila! Your 2-year counter resets back to 0.)), and allowing their employees to buy stock). In order to prevent these evils from befalling the company and its employees we were specifically instructed not to tolerate any kind of pro-union talk from any coworkers, but to instead report any kind of pro-union sentiments expressed by a coworker to a manager immediately. This is a standard training video that is shown to ALL Mall-Wart employees when they are first hired. Does that sound like they would allow Californians to unionize? Here's a hint: I live in California, and the Sam's Club where I worked is in California. Like I said, check your sources.
Last edited:
Similar threads
