New York Times: Wal-Mart used payoffs in Mexico

New York -- Wal-Mart Stores’ ongoing investigation into bribery allegations was thrust into the spotlight again on Monday after the New York Times ran a lengthy piece detailing how an elaborate series of payments accelerated construction of a controversial store in Mexico City.



The thoroughly sourced article laid out in intricate detail how Wal-Mart funneled payments to various Mexican authorities to facilitate construction of a store in the nation’s capital that was particularly controversial because of its location near the ancient Aztec pyramids of Teotihuacan. According to the New York Times, "Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited."



The article was a follow-up to an equally extensive piece that appeared in late April that asserted Wal-Mart executives were aware of corruption in Mexico but failed to act. Wal-Mart disputed that assertion at the time and maintained it had previously disclosed its own investigation in documents filed with the Securities and Exchange Commission in late 2011, well before the original New York Times article appeared April 22.



The most recent article prompted a swift response from Wal-Mart in which it acknowledged the ongoing investigation and expressed regret that it couldn’t share more details.



“The allegations contained in the New York Times article surrounding events in 2003-2004 involving the permitting and licensing process for a Walmart de Mexico store in Teotihuacan, Mexico, have been part of the company’s ongoing investigation of potential violations of the U.S. Foreign Corrupt Practices Act we began more than a year ago,” Wal-Mart spokesman David Tovar said in a statement released Monday night. He noted that the investigation is being overseen by an audit committee of the board that is composed entirely of independent directors and that Walmart is cooperating with the Department of Justice and the Securities and Exchange Commission. "At this point, the investigation is still ongoing and we have not yet reached final conclusions. A thorough and independent investigation will take time to complete. We wish we could say more but we will not jeopardize the integrity of the investigation.”



Wal-Mart maintains that it is committed to a strong and effective global anti-corruption program and detailed how over the course of the past 20 months it has established several new compliance positions around the world, directed more than 300 third-party legal and accounting experts who have dedicated more than 79,000 hours to the effort, conducted more than 85 in-country visits and more than 1,000 interviews of market personnel, spent more than $35 million on new processes and procedures and conducted training sessions attended by more than 19,000 employees.



The company also shared an internal memo distributed on Dec. 17, in which president and CEO Mike Duke addressed the New York Times article and the importance of acting with integrity.



“Leading on integrity begins with me and our executive team, and it depends on each of you," Duke said. “As leaders, we are measured by our weakest moment, so we can't have a weak moment in the area of integrity. We can have a bad sales day and a good sales day and hope they average out, but we can’t average integrity. The only way our company can grow and thrive is for every Walmart associate to do the right thing – 24 by 7 in every country that we operate in.”



He also repeated a familiar theme regarding how the chain, because of its success, faces higher expectations from customers and employees.



“I love that the world looks to us as a leader,” Duke said. “Walmart has an influencing role, and we must lead by example and help raise ethical standards overall. 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."



To date, those resources total $99 million. That is the amount Wal-Mart said it has spent on its FCPA investigation during the first nine months of its fiscal year.



To read Monday’s article in the New York Times, click here.



For a detailed look at Wal-Mart’s compliance and anti-corruption efforts and to read the company’s response to the New York Times article, click here.

To read the original New York Times article that appeared April 22, click here.