From Mexico Bribery to Sandy Hook Gun Debate, Walmart's Bad Week Continues

Posted by Sheila Shayon on December 18, 2012 12:07 PM

Executives at Wal-Mart Stores, Inc. in Bentonville, Arkansas, were already having a bad week, with its holiday-heightened labor dispute on the current cover of Bloomberg Businessweek and brisk business making Bushmaster rifles the #1 assault rifle in America criticized in the wake of the Newtown, CT, school massacre. Still, at least the Mexico bribery scandal that besmirched its corporate reputation earlier this year, when a New York Times investigation was published, was dying down. Until Tuesday night.

That's when the New York Times' follow-up to its April expose was published online, with the headline, "How Wal-Mart Used Payoffs in Mexico." After examining thousands of documents and talking to local officials and Walmart's own executives, the latest chapter in the NYT expose concludes, "An examination by The New York Times found Wal-Mart de Mexico to be an aggressive and creative corrupter, offering payoffs to get what the law otherwise prohibited."

The story is featured on the New York Times homepage today, smack in the middle of the gun debate raging among its readers, editors, writers and the population at large — a debate in which Walmart's brand is also involved as America's largest seller of guns, and the Sandy Hook rifle, in particular.

The Mexico bribery scandal isn't a local issue, but growing in large in scope as its perpetrator, the world’s leading private employer. With 2011 sales of $421.85 billion, it's also the largest private employer in Mexico, with 221,000 people working in 2,275 stores, supermarkets and restaurants.

The New York Times back in April described the Mexico bribery situation as symptomatic of a “a prolonged struggle within the company that pitted its much publicized commitment to the highest moral and ethical standards against its relentless pursuit of growth.” The seven-year campaign of unethical behavior in that market was estimated to involve more than $24 million in “suspect payments” and corporate aggression.

When the mega-retailer “became aware of the situation in Mexico from a former executive, who explained how the company’s Mexican division had orchestrated a campaign of bribery to win market dominance, instead of deciding to expand an internal investigation, Wal-Mart’s leaders decided to shut it down.” Now, it turns out, that's not exactly how it played out.

The latest story from Mexico by the NYT's investigative reporters reveals a pattern of payments over the last decade, as The Atlantic notes: “We're not talking a few bucks here to get out of an inspection or a couple hundred pesos there to speed up the permit process. We're talking about millions of dollars worth of bribes that gave Wal-Mart de Mexico, the company's branch south of the border, the power to pretty much do what it wanted.” 

For the people of Mexico, it's also a matter of natural and cultural pride at stake, as Walmart built a covert operation that proactively sought officials to bribe in order to illegally construct a superstore in the shadow of Mexico's most revered cultural landmark, the pyramids of Teotihuacán. 

The Times expose, using the company's corporate moniker, goes on to reveal: “Wal-Mart bribed local and national officials to build 19 stores, sometimes in 'environmentally fragile' areas and other times without construction permits. Some individual stores required nearly a million dollars in bribes for Wal-Mart to get what they wanted.” 

“Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.”

As Marketplace notes, the retail behemoth is also under scrutiny for suspected bribery in China, Brazil and India, and has spent about $100 million hiring lawyers and investigating alleged systemic corruption worldwide. Mike Koehler, who teaches business law at Butler University and is an expert on the Foreign Corrupt Practices Act, says of investigators, “They will be curious as to whether the conduct was isolated or whether this is how Wal-Mart obtained foreign licenses and permits all over the world.” 

The U.S Justice Department and the Securities and Exchange Commission are investigating violations of the Foreign Corrupt Practices Act, and Mexican authorities and Congressional Democrats have begun additional investigations.

Protests in Mexico against Walmart’s “bland, impersonal 'gringo lifestyle' of frozen pizzas, video games and credit card debt,” notes the Times, had no impact – until now. The supermarket in Teotihuacán opened on Nov. 4, 2004, and today, eight years later, remains controversial at best, and personifies at worst, the staggering entitlement of corporate greed by the world’s largest retailer.

Teotihuacán, “city of the gods” for the Aztecs, was built around a temple (parts of which remain today) and two great pyramids, the Sun and the Moon, making it integral to Mexico’s history and cultural legacy – until Walmart paid to redraw the maps, the NYT reporters learned. As the Atlantic Wire notes, "In one instance, they even paid a local official to adjust a map designed to create a protective zone around the region's priceless pyramids. World heritage be damned. If Wal-Mart wants its store in a convenient location, Wal-Mart will get its store in a convenient location.” 

Walmart's VP of Communications, David Tovar, had this to say on the latest NYT article on the Mexican bribery ring (read the statement in full here and watch Tovar's video, below): “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 are committed to having a strong and effective global anti-corruption program everywhere we operate and taking appropriate action for any instance of non-compliance.”

Perhaps the scope of this investigation will challenge the underlying ethos of robber barons prevalent in board rooms around the world, and perhaps the outrage of consumers and activists will soothe the ire of the Aztec gods until significant changes are made to preserve and accommodate history in the wake of commerce. Perhaps.


Fern Farkingdale United States says:

Nice "I look like a hostage" telepromter-ed video statement, Wal-Mart. Leslie Dach really runs amateur hour down there.

December 18, 2012 04:11 PM #

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