Wal-Mart Stores may be close to a resolution of the Foreign Corrupt Practices Act investigation that has cost the retailer more than $870 million since 2012. Chief Financial Officer Brett Biggs said given a loss is probable, the retail giant recorded a charge of $283 million, or 9 cents per share, in the fiscal third quarter in anticipation of a settlement.
When asked by the media for more details, Biggs said aside from the $283 million accrual charge related to settlement discussions and a probable loss the retailer could say no more.
Mike Kohler, a law professor at Southern Illinois University, told Talk Business & Politics last year that Wal-Mart’s ongoing FCPA investigation was likely winding down and he anticipated a settlement this year. Thursday, Kohler said if the $283 million settlement holds, the company’s pre-enforcement action fees and expenses totaling $870 million over the past five years could be about three times the settlement which is fairly typical.
Following are Wal-Mart disclosed FCPA and compliance-related costs.
2012: $157 million
2013: $282 million
2014: $173 million
2015: $126 million
2016: $99 million
2017: $33 million (through first three fiscal quarters)
Kohler said it’s not unusual for the ongoing probe to cost between 3 to 10 times more than the actual settlement. He estimates the cost per day over the past 17 quarters has ranged from $80,000 recently to a high of $1.3 million at the height of the investigation.
In June, Talk Business & Politics asked CEO Doug McMillon about lessons learned from the six-year FCPA investigation. McMillon was CEO of Walmart International when the investigation began in late 2011.
“One of the things I have learned in this process is that the disciplines and  areas of compliance have to be stood up … things like permits and licenses, pharmacy compliance and food safety,” McMillon said. “You need expertise in each of the 14 areas, give them the right investment class processes, support them with systems and then you need visibility to see across. We had compliance resources, scattered all over the place, in some cases they were functioning very well reporting up to operational leaders. But, over the last few years we have put things together and connected the dots in a way that has strengthened our compliance and ethics programs and it’s one of the things I am really and sincerely proud of. You have to be vigilant, there is always work to do but we have learned a lot and benefited from the things that we have done. Over time, I think our business is stronger as a result of the changes that we have made.”
Nearly everyone implicated in the probe according to the New York Times article in 2011 has left the company with the exception of Rob Walton, who remains a board member, though he stepped down as chairman in 2015.
• Eduardo Castro Wright was linked to the bribery allegations in Mexico, a market he grew to prominence. Castro Wright retired in July 2012.
• Tom Mars, the former chief administrative officer, exited Wal-Mart in March 2013 after 11 years. He served as general counsel during the period under scrutiny for violations of the Foreign Corrupt Practices Act. From 2002 to 2009, Mars was involved in an investigation into bribery allegations regarding a Walmart store built near Mexican pyramids, according to company emails released earlier this year by members of Congress. Internal emails mentioned in a New York Times report connect Mars to the matter as the senior corporate lawyer who briefed top executives such as former CEO Mike Duke and board chairman Rob Walton in 2005 on the Mexican bribery allegations.
• Former CEO Mike Duke headed up Walmart International during the time under investigation. He retired as CEO in January 2014 and retired from the board in June 2014.
• Former CEO Lee Scott was CEO of Wal-Mart Stores Inc. during the time under investigation. Scott exited his service on the board of directors in June 2013.
Kohler said just because someone is named in a newspaper article doesn’t mean they are guilty. He said Wal-Mart has been more transparent than many companies about its investigation, and often doesn’t get credit in the press for self-reporting potential violations well ahead of media reports.