Wal-Mart’s Compliance Lapses May Extend Beyond Foreign Bribery, Lawmakers Say
By Jeffrey Benzing | August 14, 2012 5:57 pm

Compliance lapses by Wal-Mart Stores Inc. may include tax evasion and money laundering in Mexico, in addition to alleged foreign bribery, according to internal documents obtained by two Democratic lawmakers investigating the big-box retailer.

Documents obtained from outside sources show “questionable financial behavior” beyond bribery, according to a letter today to Wal-Mart’s chief executive officer from Reps. Elijah C. Cummings (D-Md.) and Henry A. Waxman (D-Calif.).

The lawmakers said they have obtained a trove of internal documents related to allegations of systematic bribery by Wal-Mart in Mexico first reported in April by the New York Times.

But the company itself has provided no documents, and the lawmakers have told Wal-Mart CEO Michael T. Duke that they are asking for cooperation a final time before the release of an investigative report on alleged violations of the Foreign Corrupt Practices Act.

“Although you have stated on multiple occasions that you intend to cooperate with our investigation,” the Aug. 14 letter said, “you have failed to provide the documents we requested, and you continue to deny us access to key witnesses.”

In June, the lawmakers revealed that Wal-Mart’s internal anti-corruption investigation had expanded to four countries beyond Mexico. Cummings and Waxman first wrote to Duke on April 23 and have repeatedly asked that the company provide documents and witnesses.

Wal-Mart has provided the lawmakers’ staff members with two briefings on compliance, but Cummings and Waxman complain that no Wal-Mart officials have been present to answer questions on bribery claims.

Instead, outside counsel have visited Capitol Hill to discuss an internal anti-corruption review which has looked at operations in Brazil, China, India, Mexico and South Africa. These were labeled “first tier” countries with the greatest risk for bribery.

A May 21 briefing was conducted by lawyers from Greenberg Traurig LLP and Akin Gump Strauss Hauer & Feld LLP. Just Anti-Corruption previously reported that Greenberg lawyers John A. PappalardoJoe D. Whitley and Greg W. Kehoe are conducting a worldwide review of the company’s compliance programs that began in March 2011.

Law firm Jones Day began a probe in November 2011 into allegations that Wal-Mart paid bribes to obtain building permits in Mexico and then tried to cover up the bribery, according to the company.

A spokesperson from Wal-Mart said today that the company is doing what it can to appropriately address requests from the lawmakers.

Though the lawmakers have obtained internal documents, including audit reports, from other sources, they have said that they have not been able to interview Wal-Mart employees responsible for FCPA compliance and have been denied access to witnesses, including Maritza Munich, former general counsel for Wal-Mart International.

Munich, who resigned in February 2006, had requested an internal follow up on bribery allegations in Mexico. She told the lawmakers that she wanted to speak with Wal-Mart executives before speaking with them.

In today’s fourth letter to Duke, Cummings and Waxman said that details on the internal investigation of FCPA violations are vague.

“[Y]our attorneys have not identified a single senior Wal-Mart manager who has been interviewed,” the letter said, “they have not provided any timeline for its conclusion, and they have not described its scope in any detail, stating only that it is not limited to ‘any particular allegations.’”

The lawmakers said their investigation has been hindered by the lack of cooperation and want input before the public release of their report and internal documents.

“We want to provide Members of Congress with whatever appropriate information we can to help them understand our efforts to address compliance issues,” Wal-Mart spokesperson Brooke Buchanan said in a statement. “We have already provided committee staff with two briefings, and we are exploring ways to make additional information available.”

Walmart de México y Centroamerica said in a statement that it did not know of an investigation by Mexican authorities into money laundering and tax evasion.

“If any such investigation were to be initiated and Walmex notified of it,” the statement said, “Walmex will cooperate with the authorities and to the extent permitted by law, will publicly disclose such facts.”

Cummings is the ranking member of the House Committee on Oversight and Government Reform. Waxman is the ranking member of the House Committee on Energy and Commerce. As members of the House minority, they do not have the power to subpoena witnesses or documents or call hearings.

UPDATE: This story has been updated to include comment from Wal-Mart Stores Inc. and Walmart de México y Centroamerica.

Facebook Twitter Linkedin Email

Leave a Comment

You must be logged in to post a comment.

Ernst & Young LLP
Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succ... more
Morrison & Foerster LLP
ANALYSIS: Anti-Corruption Developments to Expect in Asia in 2014 more
Paul Hastings
ANALYSIS: Chevron v. Donziger: An Enforcement Action Drama more
Debevoise & Plimpton LLP
ANALYSIS:  DOJ Re-addresses Issues Arising When a Business Partner Becomes a Foreign Official more
Husch Blackwell LLP
ANALYSIS: Did You Just Eat a Problem? Inheriting Corruption Allegations Through Acquisitions. more
Dechert LLP
ANALYSIS: Reining In Overboard Criminal Subpoenas - Is Some Relief In Sight? more

NEW: NEW JERSEY GOV. CHRISTIE PROBE: Manhattan District Attorney Cyrus Vance Jr. is investigating Chris Christie capo David Samson's operations at the NY/NJ Port Authority. Main Justice's Mary Jacoby discusses with Alex Wagner on MSNBC.

LISA BRENNAN ON RACHEL MADDOW SHOW: The MSNBC host interviewed Main Justice contributor Lisa Brennan about her scoops in the Chris Christie Bridgegate scandal.

RACHEL MADDOW SEGMENT ON MAIN JUSTICE'S SCOOPS: The MSNBC host details Main Justice's exclusive reporting on New Jersey U.S. Attorney Paul Fishman's probe of the George Washington Bridge lane closures.