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
Norton Rose Fulbright LLP
ANALYSIS: Know Your Target: DOJ Reinforces Key Successor Liability Principles more
Shearman & Sterling LLP
ANALYSIS: Gifts of Travel and Luxury Watches to Saudi Officials Not Mere ‘Icing on the Cake’ for FCPA Charges more
McGuireWoods LLP
ANALYSIS: Update on Brazil - Embraer SA and Anti-Corruption Progress more
McDermott Will & Emery
ANALYSIS: Second Circuit’s Newman Decision: Key Implications for the Defense Bar more
McMillan LLP
ANALYSIS: Blame it on Rio - Whistleblowing and World Football's Anti-Corruption Crisis more
Freshfields Bruckhaus Deringer LLP
ANALYSIS: Five Potentially 'Toxic' Contracts to Pay Attention to in Healthcare M&A Transactions more

Attorney General Eric Holder announces new guide to law enforcement for First Amendment-protected demonstrations. Comes in advance of expected announcement that Officer Darren Wilson won't be indicted in Ferguson, Mo.

President Obama announces Loretta Lynch as nominee for Attorney General.