Wal-Mart silenced Mexico bribe inquiry: NY Times

Sat Apr 21, 2012 6:39pm EDT
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(Reuters) - Retail giant Wal-Mart Stores Inc squelched its own internal investigation of allegations made by a former executive of its subsidiary in Mexico that the Mexican division had orchestrated a campaign of bribery to grab market dominance, the New York Times reported on Saturday.

The paper said in September 2005 a senior Wal-Mart lawyer received an e-mail from Sergio Cicero Zapata, a former executive at the company's largest foreign unit, Wal-Mart de Mexico, describing how the subsidiary had paid bribes to obtain permits to build stores in the country.

Wal-Mart sent investigators to Mexico City and found evidence of widespread bribery, but Wal-Mart's leaders then shut down the investigation and notified neither American nor Mexican law enforcement officials, the Times reported. The Times said the company had found a paper trail of hundreds of suspect payments totaling more than $24 million.

The Times reported that the former Wal-Mart executive gave names, dates and bribe amounts, adding that he knew so much because for years he had been the lawyer in charge of obtaining construction permits for Wal-Mart de Mexico, or Walmex as the company is known locally.

"We take compliance with the U.S. Foreign Corrupt Practices Act (FCPA) very seriously and are committed to having a strong and effective global anti-corruption program in every country in which we operate," Wal-Mart said in a statement.

The Justice Department and the U.S. Securities and Exchange Commission in the past few years have aggressively stepped up enforcement of the FCPA, a 1970s law that bars bribes to officials of foreign governments.

But the government units that enforce the law are staffed with only a few dozen prosecutors and agents. Those units traditionally rely on the companies to hire outside lawyers to conduct the bulk of the investigation themselves since such probes usually involves collecting millions of documents and interviewing hundreds of witnesses outside the United States.

The companies then generally turn over to the agencies the results of the investigation, which can cost tens or even hundreds of millions of dollars in legal fees and take several years to complete.


A worker walks through the "Action Alley" at a new Wal-Mart store in Chicago, January 24, 2012. The store will open on January 25, and it will be Wal-Mart's largest outlet in Chicago. REUTERS/John Gress