Two minority House Democrats have launched an investigation into Wal-Mart Stores Inc.’s potential violations of U.S. foreign bribery law and any connection the retailer may have to the U.S. Chamber of Commerce’s high-profile lobbying campaign to amend the Foreign Corrupt Practices Act.
Wal-Mart denied involvement in the Chamber’s push for legislation.
Rep. Elijah E. Cummings (Md.), the ranking member of the House Committee on Oversight and Government Reform; and Rep. Henry A. Waxman (Calif.), the ranking member of the House Committee on Energy and Commerce, sent letters to Wal-Mart CEO Michael T. Duke, Chamber of Commerce President Thomas J. Donohue and Retail Industry Leaders Association Chairman Gregg Steinhafel.
In the letter to Duke, dated Monday, Cummings and Waxman requested a meeting with company officials to respond to allegations in a recent article by The New York Times that Wal-Mart paid $24 million in bribes to Mexican government officials and then tried to bury the results of an internal investigation. Those actions, if true, would likely have been a violation of the FCPA, which prohibits payments to foreign officials to win business.
“We’re in communication with Wal-Mart,” an aide involved in the investigation told Main Justice. ”They’ve indicated that they’ll be cooperative.”
But Democrats expanded their target beyond Wal-Mart today.
In letters to Steinhafel and Donohue, the lawmakers expressed concern about the retailer’s involvement in the Chamber’s Institute for Legal Reform lobbying campaign to amend the FCPA, an effort anti-corruption groups have characterized as an attempt to weaken the 1977 law.
“We are concerned about the role that Wal-Mart officials may have played in the Chamber’s Institute for Legal Reform,” the lawmakers wrote. “It would appear to be a conflict of interest for Wal-Mart officials to advise on ways to weaken the Foreign Corrupt Practices Act at a time when the leadership of the company was apparently aware of corporate conduct that may have violated the law.”
Business says it’s not trying to weaken the law but rather seek clarity about what triggers a foreign anti-bribery violation. The U.S., for example, considers any employee of a state-owned enterprise – such as doctors in state-owned foreign hospitals – to be prohibited “foreign officials” who cannot accept payments.
That definition has given rise to ambiguities about whether its permissible to take doctors to dinner to build professional relationships. The U.S.’s response had generally been not if the dinners are excessively lavish and intended to persuade doctors at state-owned facilities to prescribe a company’s drugs or implant its medical devices.
But the Chamber’s efforts became politically toxic last summer with the news that reporters at Rupert Murdoch’s News Corp. in London had paid British police officers for information. The reports prompted the Justice Department to open an investigation into whether the New York-headquartered News Corp. violated the foreign anti-bribery law. There was also speculation - denied by the Chamber and News Corp. – that the media company had been directly involved in the Chamber’s campaign to amend the FCPA.
Then last November, an announcement by Justice Department Criminal Division chief Lanny Breuer that the department would issue its first-ever guidance for legal practitioners on the FCPA further stalled the drive for legislation. Democrats who may have been under pressure from their business constituents to amend the law now had cover to hold off and see whether the agency would fulfill its pledge to provide more clarity about the law’s enforcement without legislative changes.
Without Democrats on board to make the politically sensitive amendments bi-partisan, Republicans were effectively blocked from moving any legislation.
Now, the revelations about Wal-Mart appear to be another blow to the FCPA amendment campaign. Just as with News Corp., Wal-Mart is being asked if it’s behind the Chamber’s FCPA push.
“As it relates to FCPA reform, Wal-Mart has never lobbied on FCPA,” spokesman David Tovar said in an email to Just Anti-Corruption. “Simply because Wal-Mart is a member of an organization does not mean we agree with every position they take.”
“We’ve received the letter from Reps. Cummings and Waxman and will be respectful of their requests and respond appropriately,” he added.
The Chamber has not yet directly received a copy of the letter, Brian Quigley, spokesman for the Institute for Legal Reform, said in a statement to Just Anti-Corruption. “We anticipate responding in the very near future.”
“Our bipartisan efforts to clarify and strengthen the Foreign Corrupt Practices Act have been long-standing and are on behalf of the entire business community,” he added. “While the law serves an important purpose, its ambiguities and current enforcement practices make it more difficult for American businesses to compete in an increasingly global marketplace.”
The investigation by Waxman and Cummings will be limited by their status as minority House Democrats. Politically, Democratic constituencies have long been opposed to Wal-Mart for its anti-union and other employment practices.
In their letter, Waxman and Cummings requested from the Chamber the following:
1. A list of all Chamber of Commerce and Chamber Institute for Legal Reform Board members and senior officials who have worked on issues related to the FCPA and have been or currently are affiliated with Wal-Mart or any of its subsidiaries or affiliates over the past ten years;
2. All internal and external communications involving the individuals identified in response to Question 1 relating to the FCPA, including any communications about attempts to change provisions of the law or to repeal it;
3. All communications about the FCPA or any other U.S. anti-bribery laws between individuals affiliated with the Chamber of Commerce or the Chamber’s Institute for Legal Reform and Wal-Mart officials, employees, or agents;
4. All documents detailing the U.S. Chamber of Commerce’s strategy for changing or repealing the FCPA; and
5. All documents including communications, relating to the actions of Wal-Mart in lobbying for changes to the FCPA or any other U.S. anti-bribery laws.
They also requested similar documents from the Retail Industry Leaders Association relating to Wal-Mart’s possible involvement in its lobbying activities on the FCPA. A spokesman said it had received the request and will respond “in a timely fashion”
RILA spokesman Brian Dodge said the association was involved in the lobbying campaign on the forthcoming guidance on the law.
“RILA has constructively participated in this ongoing dialogue and has joined others who have identified for the Department of Justice several elements of the law where clarification would be helpful,” he said in a statement to Just Anti-Corruption. “RILA believes that adherence to the law is essential and that further clarity and predictability regarding FCPA enforcement will help to ensure such compliance.”
This story was updated at 11:00 a.m. on April 26, 2012 with additional comment from RILA.