In April of this year, Walmart became embroiled in a mini-scandal after an heavily researched article in the New York Times not only alleged the company had used bribes for many years to fuel its highly successful penetration into the Mexican market, but that senior company executives may have been involved in cover-up activities. (See Walmart Suddenly Embroiled in Scandal over Alleged Bribery in Mexico – and more Importantly the Cover-Up.)
SCDigest Says: |
 The story is important not only due to the legal aspects of it, but because the illegal activity may have played a key role in Walmart de Mexico's rapid growth and success there, giving it an unfair advantage over rivals.
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But the
story didn't seem to stick for more than a few days – and at the time
SCDigest argued that the once hated Walmart had earned itself a bit of a
pass from many in the government due to its very active efforts in
terms of sustainability. That said, there are on-going investigations
now by the SEC and the Justice departments that could lead to stuff
penalties and possible lrgal problems for current or past Walmart
executives.
There are official investigations occurring in Mexico as well. But Walmart's troubles appear far from isolated to Mexico alone.
Now the New York Times is back, publishing another article this week on the subject after months of research by reporters David Barstow and Alejandra Xanic von Bertrab that lays bare the bribing activities in significant detail.
For example, in
2004 a choice location for a Walmart store near the ancient pyramids in
San Juan Teotihuacan was about to be blocked by zoning changes that
would prevent development in the area. But a bribe of $52,000 by
Walmart de Mexico soon change that (just one of four payments related to
the project that totaled to more than $200,000).
"The plan was
simple. The zoning map would not become law until it was published in a
government newspaper," the Times reports. "So Walmart de Mexico arranged
to bribe an official to change the map before it was sent to the
newspaper, records and interviews show. Sure enough, when the map was
published, the zoning for [the field] field was redrawn to allow
Walmart's store."
When Walmart
started to build its store at the site, it was met by fierce opposition
from those opposed to a store so close to a cultural treasure, amid
other concerns. Yet even as the protests went on for months, somehow the
story of the altered zoning map went unmentioned.
A former lawyer
for Walmart de Mexico told the Times that "by outmuscling protesters and
building in the shadow of a revered national treasure, they would send a
message to the entire country: If we can build here, we can build
anywhere."
The thrust of
the story in April, repeated in the this latest article, is that as an
internal company investigation began to turn up details of the broad
bribery activity, Walmart's then CEO Lee Scott shut it down in 2006.
The story is
important not only due to the legal aspects of it, but because the
illegal activity may have played a key role in Walmart de Mexico's rapid
growth and success there, giving it an unfair advantage over rivals
that changed the Mexican retail landscape. It is now Walmart's largest
international division. In 2011,the division had profits of about $6.58
billion.
The Times says
its current article picks up basically where the internal investigation
stopped in 2006. In doing that, it lays down some serious charges:
"Walmart
de Mexico was an aggressive and creative corrupter, offering large
payoffs to get what the law otherwise prohibited. It used bribes to
subvert democratic governance - public votes, open debates, transparent
procedures," the article says. "It used bribes to circumvent regulatory
safeguards that protect Mexican citizens from unsafe construction. It
used bribes to outflank rivals."
(Supply Chain Trends and Issues Article - Continued Below)
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