In its second investigative salvo against the world’s largest retailer, The New York Times on Monday published a 7,000-word narrative on Wal-Mart operations in Mexico, alleging bribery in the opening of 19 stores — with well over $1 million paid for just three locations — by an affiliate which is now that country’s largest employer.
Wal-Mart Stores Inc., the parent company in Bentonville, Ark., released a statement timed to coincide with publication, saying the allegations at the center of the article were already under investigation by the company, which was cooperating with U.S. authorities and on its way to establishing a “world-class” anti-corruption program.
The company also released an internal memorandum from Michael T. Duke, president and CEO of Wal-Mart Stores Inc., who addressed company employees about the allegations but praised the company’s commitment to integrity.
“We can have a bad sales day and a good sales day and hope they average out, but we can’t average integrity,” said Duke. “As I have said all along, we will use these events to raise the bar and make Walmart an even better company. We have ensured that the ongoing investigation has the time and resources it needs to get to the bottom of what happened.”
Though the Times article resulted from a review of conduct at 19 locations, the story focused on three specific building and infrastructure projects which the newspaper alleged were the result of over $1 million in bribes.
- Eight bribes totaling $341,000 for a Sam’s Club, one of Wal-Mart’s chain of member’s only retail warehouses, that was built in a densely populated Mexico City neighborhood even though the developers lacked a construction license, an environmental permit, an impact assessment or a traffic permit.
- Nine bribes totaling $765,000 for a “vast” refrigeration facility in an environmentally sensitive flood basin north of Mexico City. Small developers avoided the area due to its lack of electricity but Wal-Mart nevertheless chose the location for its energy intensive project.
- Four bribe payments totaling more than $200,000 for the construction of a Bodega Aurrera in Teotihuacán in which evidence suggests Mexican authorities were paid to reverse their own zoning decisions and which may have destroyed ancient Aztec remains.
The Times article concerned events from almost a decade ago but added compelling detail about instances where regulations were undermined and the public interest shunted aside.
The article described Wal-Mart’s Mexican subsidiary, Wal-Mart de Mexico SA de CV as an “aggressive corrupter” rather than a company reluctantly pulled into local venality or an enterprise making payments to facilitate routine government actions.
The article expanded on the allegations of an earlier article published in April that built on 15-hours of interviews with the whistleblower Sergio Cicero Zapata, a Wal-Mart lawyer who has implicated himself in describing a campaign of bribery across Mexico.
That article said the bribery allegations had been brought to the attention of senior management at the parent company, who had then decided to sweep the matter under the carpet.
Officials and offices implicated in Monday’s story include Guillermo Rodríguez, mayor of Teotihuacán, Mexico’s Office of Urban and Regional Planning and its former director Víctor Manuel Frieventh. Both denied wrongdoing. The National Institute of Anthropology and History was also implicated.
In addition to embarrassing local officials and fueling local demands for explanations, The Times reporting on Wal-Mart has helped knock the wind out of the sails of industry efforts to win changes to the U.S. anti-bribery statute in a time of aggressive enforcement.
The Washington Post in April drew unflattering attention to Wal-Mart’s participation in efforts by the U.S. Chamber of Commerce to see amendments enacted to the Foreign Corrupt Practices Act even as the company was accused of violating the law.
Wal-Mart’s internal investigation has spread from Mexico to India, China, Brazil and possibly elsewhere, putting the company on track to spend well over $100 million this year in legal and investigative fees to respond to the bribery allegations.
The scores of attorneys reportedly retained by the company have been drawn from firms including Jones Day, Akin Gump Strauss Hauer & Feld LLP and Greenberg Traurig LLP.
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