Business

Wal-Mart probes bribery allegations in Mexico

Wal-Mart, the world’s largest retailer, said it is probing allegations its managers in Mexico employed a widespread campaign of bribery to secure and expand the company’s presence in the country.

“This work is ongoing and continues today,” David Tovar, vice president of corporate communications, said in a statement late Saturday following a report by The New York Times that unearthed illicit payments and an apparent effort to cover them up.

“We don’t have a full explanation of what happened,” the spokesman added.

The Times report alleged that Wal-Mart was made aware of the bribery campaign by Wal-Mart de Mexico, the retail giant’s largest non-US subsidiary, to win market dominance and to keep the effort hidden from US headquarters.

When it was revealed however there was a failure to investigate or remedy fully.

In 2005, a high-ranking company attorney received an email from a former Wal-Mart de Mexico executive first revealing the clandestine campaign which aimed to rapidly expand throughout the country, according to the Times.

When the Arkansas-based US retailer sent investigators to Mexico City they quickly uncovered widespread bribery, the Times said.

An internal probe found a paper trail, said the report, amounting to over $24 million in suspected payments.

In a report back to headquarters, the Wal-Mart’s top investigator said there was “reasonable suspicion to believe that Mexican and USA laws have been violated,” said the Times.

While the lead investigator urged a broader probe, however, an examination by The New York Times found Wal-Mart’s leaders shut it down, and that there was a failure to alert either US or Mexican authorities to the matter.

Meanwhile top Wal-Mart de Mexico executive Eduardo Castro-Wright, found to be a leader of the bribery campaign, was elevated to vice chairman of Wal-Mart in 2008, the paper noted.

Tovar said in his statement the company was “deeply concerned,” but downplayed the immediacy of the allegations.

“Many of the alleged activities in The New York Times article are more than six years old,” said Tovar.

“If these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by these allegations and are working aggressively to determine what happened.”

“We will not tolerate noncompliance with FCPA (US Foreign Corrupt Practices Act) anywhere or at any level of the company,” he added.

However, Tovar denied that the US government knew nothing about the probe.

“We have met voluntarily with the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to self-disclose the ongoing investigation on this matter,” he said.

He added that Wal-Mart management had also filed a statement in December to inform its shareholders of the investigation.

“The company’s outside advisors have and will continue to meet with the DOJ and SEC to report on the progress of the investigation,” the spokesman pointed out.

“We don’t have a full explanation of what happened. It would be inappropriate for us to comment further on the specific allegations until we have finished the investigation,” Tovar added.

Wal-Mart became the world’s largest retailer by slashing the costs of supply and overhead, and passing much of those savings on to the consumer.

It was an act that competitors, including mom and pop stores, often found impossible to match.

But in recent years the company has seen fierce competition surge from online retailers like Amazon, which — without the cost of running physical stores — in many cases have been able to match or even beat Wal-Mart at price-cutting.

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