NYT: Walmart Covered Up Bribery Scheme In Mexico

by Roby Brock ([email protected]) 166 views 

The New York Times has a lengthy investigative piece describing an alleged long-running bribery scheme in Walmart’s Mexican subsidiary, Wal-Mart de Mexico.

The article covers a time period back into the early 2000’s involving kickbacks to real estate agents from construction companies associated with building the retail giant’s stores in Mexico. There are allegations claiming Walmart may have violated the Foreign Corrupt Practices Act, a federal law that makes it a crime for American corporations and their subsidiaries to bribe foreign officials.

Perhaps more damaging is the New York Times investigation of a cover-up at corporate headquarters of the entire endeavor. Former top Walmart executives Lee Scott and Eduardo Castro-Wright are named as deeply knowledgeable of the enterprise, and the story suggests that current CEO Mike Duke was aware of the Mexican kickback scheme. Duke was head of international operations for Walmart at the time.

From the New York Times:

In September 2005, a senior Wal-Mart lawyer received an alarming e-mail from a former executive at the company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country.

The former executive gave names, dates and bribe amounts. He knew so much, he explained, because for years he had been the lawyer in charge of obtaining construction permits for Wal-Mart de Mexico.

Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: “There is reasonable suspicion to believe that Mexican and USA laws have been violated.”

The lead investigator recommended that Wal-Mart expand the investigation.

Instead, an examination by The New York Times found, Wal-Mart’s leaders shut it down.

Neither American nor Mexican law enforcement officials were notified. None of Wal-Mart de Mexico’s leaders were disciplined. Indeed, its chief executive, Eduardo Castro-Wright, identified by the former executive as the driving force behind years of bribery, was promoted to vice chairman of Wal-Mart in 2008. Until this article, the allegations and Wal-Mart’s investigation had never been publicly disclosed.

The New York Times piece is involved and detailed. Walmart issued a very lengthy response to the article today that does not deny any of the allegations or specifics in the story. Walmart’s response said it has self-disclosed an investigation of the matter to federal authorities in an effort to get “a full explanation” of what transpired.

“Many of the alleged activities in The New York Times article are more than six years old. 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,” said David Tovar, VP of Corporate Communications for Walmart.

You can read the full statement at this link or watch Walmart’s response video below.