House Democrats investigating whether Wal-Mart Stores Inc. played a role in lobbying to amend a U.S. foreign bribery law sent letters Tuesday to the U.S. Chamber of Commerce and the Retail Industry Leaders Association, pressing them on apparent conflicts of interest.
The top Democrats on the House Committee on Oversight and Government Reform and the House Committee on Energy and Commerce opened the investigation following a New York Times article reporting that Wal-Mart had paid millions in bribes to Mexican government officials in exchange for swift approval of building permits, and then quashed an internal investigation into the potential violations of the FCPA.
Reps. Elijah Cummings (D-Md.) and Henry Waxman (D-Calif.) are looking into potential conflicts of interest between the high-profile lobbying campaign to amend the law, spearheaded by the Chamber’s Institute for Legal Reform; and Wal-Mart’s internal investigation of its own potential violations of the FCPA, which prohibits payments to foreign officials to win business.
Lawyers from Akin Gump Strauss Hauer & Feld LLP representing Wal-Mart met with staffers from both committees yesterday to brief them on the company’s current FCPA compliance program. A staffer involved in the investigation said that the briefing did not satisfy their requests to the company that it respond to the allegations in the New York Times story.
Wal-Mart is represented on the Institute’s board of directors by Jeffrey J. Gearhart, Wal-Mart’s general counsel and corporate secretary, though the company denied involvement in the decision to lobby to change the FCPA. The Chamber, joined by other industry associations, has spent more than a million in a push for what it calls more clarity in the foreign bribery law, which it says is unduly costly for American businesses.
But in a letter to Chamber president and CEO Thomas Donohue, the Democratic lawmakers noted that Wal-Mart is not the only company alleged to have violated the Foreign Corrupt Practices Act to have representatives on the board of the Institute for Legal Reform.
The Institute for Legal Reform is the Chamber’s lobbying and advocacy arm on legal issues. A Chamber spokesperson declined to comment on the letter.
“Our review… reveals that 14 out of 55 ILR board members — almost one in four — were affiliated with companies that were reportedly under investigation for violations or had settled allegations that they violated the Foreign Corrupt Practices Act,” the lawmakers wrote.
“We are concerned about these apparent conflicts of interest,” they said in the letter. “[N]owhere did ILR disclose that over a dozen of the corporations represented on its board have violated or been under investigation for violating the Foreign Corrupt Practices Act.”
Cummings and Waxman pointed specifically to Johnson & Johnson, the health products giant that paid $70 million in penalties to resolve FCPA charges last year; and Citigroup, which has received letters of inquiry from the Securities and Exchange Commission. They also noted that Pfizer Inc. has agreed in principle to pay $60 million to the Justice Department over FCPA allegations. They listed Koch Industries as well, which, according to press reports, was accused of paying bribes in Africa, Saudi Arabia and India in French civil court.
All four companies have representation on the Institute’s board.
The lawmakers requested all Institute board minutes from meetings discussing the FCPA and any policies dealing with potential conflicts of interest, among other documents. They also expressed frustration with the Chamber’s May 4 response to their previous letter, “which failed to answer any of our questions and provided no information about the relationship between Wal-Mart executives and your organization’s push for changes to the Foreign Corrupt Practices Act.”
In a similar letter to Gregg Steinhafel, the two Democrats asked for further clarification on Wal-Mart’s role in the Retail Industry Leaders Association’s lobbying on the FCPA. The letter noted five current and former Wal-Mart executives on the association’s board.
“We ask that you clarify what role, if any, these individuals had with regard to RILA’s positions on the Foreign Corrupt Practices Act,” the lawmakers wrote. “If you have not already done so, we request that you search for any email or other communications with these individuals relating to the Foreign Corrupt Practices Act and provide any responsive documents to us.”
RILA declined to comment on the new letter.
Cummings and Waxman asked both organizations to comply with their requests by June 4. Last week they asked Wal-Mart to allow former general counsel Maritza Munich to speak with their investigators. Munich was identified in the New York Times article as having pushed the retailer to mount a full internal investigation of the bribery allegations.
It’s unclear how far the House Democrats’ investigation will go. Democrats are in the minority in the House and therefore lack the ability to call committee hearings and or issue subpoenas. There appears to be no similar probe underway in the Senate, where Democrats control the chamber.
