India to Mexico, Walmart accused of paying bribes for profits worldwide
22/06/2019
new delhi: Inside Walmart’s corporate offices in Brazil, one local contact was known as the “sorceress” for the ability to obtain government permits quickly.
In India, concerns about bribery were met with a “wink and a nod” by Walmart’s local business partner. In China, money was funneled to a local landlord for “government relationship consulting services.” And in Mexico, cars and computers were donated to governments in communities where Walmart was planning to build new stores.
For more than a decade, Walmart used middlemen to make dubious payments to governments around the globe in order to open new locations, United States prosecutors and securities regulators said in a settlement agreement on Thursday.
But even as employees frequently raised alarm, the company’s top leaders did little to prevent Walmart from being involved in bribery and corruption schemes.
That lack of internal control led to a seven-year inquiry that culminated on Thursday with Walmart’s Brazilian subsidiary pleading guilty to a federal crime. The guilty plea, and the $282 million in fines that Walmart has agreed to pay, capped one of the biggest investigations ever under the Foreign Corrupt Practices Act, which makes it illegal for American corporations to bribe overseas officials.
“Walmart profited from rapid international expansion, but in doing so chose not to take necessary steps to avoid corruption,” Brian A. Benczkowski, an assistant attorney general, said in a statement.
The investigation, which was conducted by the Department of Justice and the Securities and Exchange Commission, came after The New York Times revealed in 2012 that Walmart had made suspicious payments to officials in Mexico and then tried to conceal them from top executives at the company’s headquarters in Bentonville, Ark. And even when the issues reached the main office, an internal investigation essentially went nowhere.
The Times’s reporting set off years of legal trouble and executive reshuffling at Walmart.
The company has spent roughly $900 million on lawyers and investigators trying to root out the problems, as well as on hiring more people to bolster its compliance systems.
Regulators said on Thursday it was not only Walmart’s drive to grow quickly, but its “low-cost philosophy” that led to poor internal controls.
The fine Walmart will pay is less than the $600 million that federal prosecutors and regulators had sought when Walmart was discussing a plea agreement during the waning days of the Obama administration, The Times reported last November.
Walmart was able to negotiate a lower fine after President Trump, who had previously criticized the Foreign Corrupt Practices Act, took office. Walmart generated a profit of about $7 billion in its 2018 fiscal year.
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