Wal-Mart seen facing sizable fines in U.S. bribery probe

Tue Dec 18, 2012 5:17pm EST
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By Aruna Viswanatha

WASHINGTON (Reuters) - Wal-Mart Stores (WMT.N: Quote) may be facing sizable fines related to allegations of widespread bribery at its Mexican affiliate, after a second report from the New York Times provided more details about the scope of the alleged misconduct.

Experts said the latest report, published online late on Monday, is significant because it appears to show that the alleged bribes were a substantial part of its business methods, and more than routine payments to speed up approvals, which are allowed under U.S. law.

The newspaper said the world's largest retailer opened some 19 stores by using hundreds of thousands of dollars in bribes to get what local laws otherwise prohibited.

On Monday, Wal-Mart said the allegations in the Times report have been part of the investigation of potential FCPA violations the company began conducting more than a year ago. Wal-Mart declined to provide additional comment on Tuesday.

In April the newspaper reported that Wal-Mart had stifled an internal probe of bribery at its Mexican affiliate Walmex WALMEXV.MX, but gave the impression that many of the bribes paid may have been used to facilitate approval processes already in motion.

"I think the Times story, if it is true, changes the perception of the Wal-Mart matter from being about facilitating payments to something larger than that," said Danforth Newcomb, an expert on the U.S. Foreign Corrupt Practices Act who defends such cases at the law firm Shearman & Sterling.

The latest story describes, for example, $765,000 in bribes that helped Walmex build a refrigerated distribution center in an environmentally fragile area where electricity was scarce and smaller developers were turned away. It also describes in detail how Walmex allegedly paid $52,000 to change a zoning map so it could open a store near the ancient pyramids in Teotihuacan.

It is difficult to put a ballpark figure on any settlement, especially because the U.S. investigation of Wal-Mart is in early stages, but experts said it could rival other major FCPA cases.   Continued...

A view shows the Walmart logo at an opened Walmart store on Thanksgiving day in North Bergan, New Jersey November 22, 2012. REUTERS/Eric Thayer