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Wal-Mart Continues Compliance Overhaul With Reorganization and Hires
Lest there be doubts that Wal-Mart Stores Inc. is taking seriously the allegations of widespread bribery in its Mexico subsidiary, this week the retailing giant announced a shake-up of its in-house legal function with a clear focus on compliance.
According to a Reuters report on Wal-Marts plans, starting on Dec. 1 its compliance, ethics, investigations, and legal units will become one organization, which will be led by general counsel and executive vice president Jeff Gearhart.
In addition, the company has made a key compliance hire. Reuters says that an internal Wal-Mart memo indicates that Sidley Austin partner Jay Jorgensen is coming aboard as senior vice president and global chief compliance officer. This hire comes a week after the company brought on Daniel Trujillo as senior vice president and chief compliance officer for Walmart International
In a separate internal memo obtained by the Wall Street Journal, Wal-Mart officials outline a $30 million review of the company's world-wide compliance controls and subsequent changes to its internal controls and protocols. The WSJ adds: The seven-page document underscores the tremendous costs of the anticorruption assessments that have become prevalent amid heightened enforcement by U.S. authorities.
These compliance costs are on top of $50 million the company has previously said it is spending on internal investigation into the Mexico bribery allegations.
The staffing changes and internal reviews may be a preamble to legal challenges that Wal-Mart is expecting in the near future. As Bloomberg Businessweek notes: The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores, possibly violating the Foreign Corrupt Practices Act.