2 question Wal-Mart statements

Retailer contradictory on bribery reports, congressmen allege

A man checks out at a cash register at a Wal-Mart store in Mexico City in this ÿle photo. Wal-Mart Stores Inc.’s Chief Executive Officer Mike Duke was told in 2005 that the retailer’s Mexico unit was bribing Mexican officials, according to e-mail messages obtained by lawmakers.
A man checks out at a cash register at a Wal-Mart store in Mexico City in this ÿle photo. Wal-Mart Stores Inc.’s Chief Executive Officer Mike Duke was told in 2005 that the retailer’s Mexico unit was bribing Mexican officials, according to e-mail messages obtained by lawmakers.

— Two Democratic congressmen said Thursday that Wal-Mart officials have offered contradictory statements about whether company executives knew early on about bribery allegations tied to the retailer’s entry into the Mexican market.

In a letter to Mike Duke, the Bentonville retailer’s chief executive, they said Wal-Mart officials knew about the reported payoffs far earlier than had previously been acknowledged.

Wal-Mart denied the charge, saying the lawmakers have their facts wrong.

“It would be a serious allegation if the CEO of one of our nation’s largest companies failed to address allegations of a bribery scheme,” wrote U.S. Reps. Henry Waxman of California, the ranking Democrat on the House Energy and Commerce Committee, and Elijah Cummings of Maryland, the ranking Democrat on the House Oversight and Investigations Committee.

The allegations were first made public in a December article in The New York Times that described how the Bentonville retailer reportedly spent millions of dollars on bribes as it attempted to gain a foothold in the Mexican market.

The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating the claims, and the company has undertaken its own investigation.

Waxman and Cummings have not been joined by the Republican chairmen of each committee in their separate investigation.

In their letter to Duke, they said a statement made by a Wal-Mart spokesman seemed to contradict e-mails sent to Duke informing him about the reports of payoffs. The money reportedly went to local officials and institutions in exchange for getting building permits for a store in Teotihuacan, near Mexico City.

In the Dec. 17 New York Times story, Wal-Mart spokesman David Tovar is quoted as saying “none of the associates we have interviewed, including people responsible for real estate projects in Mexico during this time period, recall any mention of bribery allegations related to this store.”

The two congressmen said a confidential source had provided them with documents that showed that Duke was personally informed in November 2005 by Maritza Munich, then general counsel of Wal-Mart International, that the local Municipal Council was paid 1.2 million pesos (about $95,000), and the National Institute of Anthropology and History was paid 500,000 pesos (about $39,670) and its director was given a gift of $400,000 to obtain local approval to build a store on an archaeological site once populated by the Aztecs.

“Contrary to Wal-Mart’s public statements, the documents appear to show that you were personally advised of the allegations in October 2005,” the congressmen wrote.

Wal-Mart said the congressmen have their facts wrong.

The Democrats’ letter “leaves the wrong impression that our public statements are contradicted by the information released today,” said Brooke Buchanan, a Wal-Mart spokesman.

“The fact is, the chronology of events relied upon in their letter is inaccurate,” Buchanan said. “The company statement referenced in their letter that appeared in the December 2012 New York Times story focused on events in 2004. The e-mails attached to the letter were sent almost a year later.”

Buchanan said Duke did not have any knowledge of bribery allegations with the company’s Mexican subsidiary in 2003 and 2004, when Duke was head of the company’s U.S. operations.

Buchanan said the company is “committed to having a strong and effective global anti-corruption program everywhere we operate and taking appropriate action for any instance of noncompliance.”

Wal-Mart said it is complying with the investigations.

Waxman and Cummings disagree.

In their letter, they said the company has kept Munich, who no longer works for Wal-Mart, from being interviewed.

“The ongoing delay frustrates our investigation,” they wrote.

Companies that think they can buy their way into a foreign market “do so at their own peril,” said Michael Mayer, vice president at Charles River Associates, a global business consulting firm that represents companies that have been accused of violating the Foreign Corrupt Practices Act, which forbids bribing foreign officials.

He said U.S. regulators have stepped up enforcement of the law and have encouraged executives to be forthcoming about violations.

“Enforcement agencies are far more lenient on companies that self-report,” Mayer said. “If they think there’s been any sort of cover-up, they’ll come down like a ton of bricks.”

According to the SEC, enforcement of the Foreign Corrupt Practices Act has increased in recent years. There were only nine cases filed against companies from 1978 through 2000.

In 2011 and 2012, the agency charged companies in a total of 26 cases, including one against Tyson Foods Inc.

In that case, the Springdale-based poultry company agreed to pay $5 million to settle regulatory violations and criminal allegations that it made illegal payments to Mexican government veterinarians to certify its chicken was safe to export to Mexico.

Wal-Mart says it is a positive force in Mexico, helping — among other things — to increase opportunity for women in the workplace there.

On Wednesday, Wal-Mart released the results of a study conducted by Corporate Woman Directors International, a Washington group that advocates for women serving in corporate leadership, that showed that the company’s Mexican operation had the largest proportion of women directors on its board among the largest 100 company’s in Latin America.

The study said five of 11 of the Wal-Mart de Mexico y Centroamerica directors, or 45.5 percent, are women. In the region, 58 of the top 100 companies don’t have women board members.

Business, Pages 25 on 01/11/2013

Upcoming Events