Fort Smith native to lead Wal-Mart’s compliance effort

by The City Wire staff ([email protected]) 616 views 

Fort Smith native Tom Gean has been handed the Herculean job of global Foreign Corrupt Practices Act compliance officer for Wal-Mart Stores in the wake of serious allegations that senior officers with the Bentonville-based retailer engaged in bribery to expedite store expansion in Mexico.

Revelations of the scandal first hit April 21 when the New York Times reported “campaign of bribery” that was allegedly managed by former Wal-Mart de Mexico CEO Eduardo Castro Wright. The bribery schemes allowed Wal-Mart to obtain construction and other permits quicker than its competitors.

According to the New York Times report, top Wal-Mart execs were alerted to the problem but shut down the internal investigation.

Gean is the former U.S. attorney for the Western District of Arkansas, and has worked as an attorney for Wal-Mart since 2004. Gean was also the prosecuting attorney for Sebastian County and a member of the Fort Smith School Board.

According to a Reuters report, Wal-Mart said Gean began the job before the NYT article ran.

Gean graduated with a bachelor’s degree in accounting from the University of Arkansas and earned his juris doctorate from Vanderbilt University. After law school, Gean practiced law in Atlanta and returned to his home town of Fort Smith in 1996. In 1996, he was elected Prosecuting Attorney for Sebastian County.

He was in 2001 appointed by President George W. Bush and confirmed by the U.S. Senate as the United States Attorney for the Western District of Arkansas.

He left that post in 2004 to became the chief legal compliance officer for Wal-Mart Stores.

The global law firm Jones Day is heading up the Wal-Mart internal investigation. The firm has more than 2,500 lawyers, and was ranked the top global law firm handling mergers and acquisitions during the first quarter of 2012. Also, Deloitte is supporting the Jones Day effort by handling the forensic accounting portion of the investigation.

Wal-Mart has in previous filings admitted to internal investigations related to the U.S. Foreign Corrupt Practices Act, but the revelations from the NYT story provides details on how the high the investigation may reach.

Some Wal-Mart watchers and legal experts say the bribery activity could result in the removal or early retirement of Lee Scott, a Wal-Mart board member and the Wal-Mart CEO during the alleged bribery action. Wal-Mart CEO Mike Duke may not be immune from the results of further investigation by U.S. officials.

In addition to pressure from the U.S. Department of Justice and other U.S. federal agencies, Mexico’s comptroller office has said it will open an investigation into the bribery issue.

Also, shareholders and law firms are lining up to sue Wal-Mart. Most of the suits allege Wal-Mart officers failed in their fiduciary duties by violating the Foreign Corrupt Practices Act.

Wal-Mart issued this statement today (April 25): “Earlier this year, prior to The New York Times article appearing, Tom Gean was appointed to the newly created Global FCPA Compliance Officer position. Tom joined Walmart’s legal department in 2004. In 2001, he was nominated by President George W. Bush and confirmed by the U.S. Senate to be U.S. Attorney for the Western District of Arkansas. He served in that capacity until he joined Walmart. In 1996 he was elected Sebastian County Prosecuting Attorney and prior to that he spent nine years in private practice.

“Below are the names of the law firms and principles at each firm that are currently assisting the company on these matters. Bios for each of these individuals are available on their company websites. These firms will not comment on this matter and will direct any inquiries to Walmart.

“It’s important to understand that the Audit Committee of the board is overseeing the investigation and is comprised entirely of independent directors. Jones Day is leading the investigation and reporting to the Audit Committee on a regular basis. Cahill Gordon & Reindel is serving as outside counsel to the Audit Committee.

“Greenberg Traurig is outside counsel for the worldwide compliance review we initiated in March of 2011. They are reporting to Tom Gean, Global FCPA Compliance Officer.

“In addition, Deloitte is serving as Investigative Forensic Accountant and assisting the Jones Day team on the investigation launched in November 2011. KPMG is serving as Compliance Review Accountant and assisting Greenberg Traurig on the worldwide compliance review we initiated in March 2011.”