The Wal-Mart bribery case

by charvaka Mon Apr 23, 2012 4:54 pm

The New York Times article on the Wal-Mart bribery case in Mexico makes compelling reading. Even as the company was working aggressively on its public image -- to counter allegations of unfair labor practices and systemic gender discrimination that were damaging the company's brand -- behind the scenes they shut down an investigation that revealed evidence of illegal activity, without notifying law enforcement. On the face of it, this sounds like a violation of fiduciary responsibility to shareholders.

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.

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.

by Marathadi-Saamiyaar Mon Apr 23, 2012 11:53 pm

charvaka wrote:The New York Times article on the Wal-Mart bribery case in Mexico makes compelling reading. 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. [/i]

24 million = Rs. 125 crores...... = money made in 3 hours by MK. If it had been an Indian corporation, the executives would have been given a huge bonus.

by Kris Tue Apr 24, 2012 12:17 am

charvaka wrote:
===================================================================================================================
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.

>>>>This whole thing about not notifying Arkansas itself screams 'plausible deniability' for HQ Everyone was in on it from the word 'go'.
Otherwise, the shutting down of the investigation and Castro's promotion make no sense.

by FluteHolder Tue Apr 24, 2012 4:29 am

24 million = Rs. 125 crores...... = money made in 3 hours by MK. If it had been an Indian corporation, the executives would have been given a huge bonus.

>>>

May be the Indian Programmers at their HQ (mostly from TCS) helped ? Smile

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