Times Investigation Puts Wal-Mart In-House Lawyer Back in the SpotlightCatherine Dunn Corporate Counsel
12-19-2012
A Wal-Mart in-house lawyer turned whistleblower is back in the spotlight of a second New York Times investigation into alleged bribery by the company in Mexico.
The article, “The Bribery Aisle: How Wal-Mart Got Its Way in Mexico,” catalogues a string of bribes that allegedly bought Wal-Mart de Mexico access to a coveted—but off-limits—tract of land near the ancient pyramids of Teotihuacán. The payments made between 2003 and 2004 totaled more than $200,000, according to the Times.
“The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business,” the article states. “Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited.”
Wal-Mart was quick to react to the piece, citing the company’s own internal investigation into the licensing and permitting process of its Teotihuacán store.
“The allegations contained in the New York Times article surrounding events in 2003-2004 involving the permitting and licensing process for a Walmart de Mexico store in Teotihuacan, Mexico, have been part of the company’s ongoing investigation of potential violations of the U.S. Foreign Corrupt Practices Act we began more than a year ago,” according to a statement from company spokesperson David Tovar.
Tovar added that the internal investigation is being overseen by the board’s audit committee, “comprised entirely of independent directors,” and that the company is cooperating with the Department of Justice of the Securities and Exchange Commission on the matter. Both agencies, which enforce the FCPA’s prohibitions on paying bribes abroad, have been investigating the company.
The global retailer has spent the better part of 2012 publicly contending with bribery allegations that exploded into view with a New York Times investigation published last April. The lengthy article alleged that Wal-Mart paid millions of dollars in bribes as part of aggressive expansion efforts in Mexico, where it is now the largest private employer.
A central figure in both Times investigations is former Wal-Mart de Mexico in-house counsel Sergio Cicero Zapata, who told the paper not only that he helped channel bribes to Mexican officials, but that, in 2005, he tried to alert Wal-Mart executives to the scheme as well. According to the Times, Wal-Mart quashed an initial internal investigation that stemmed from Cicero’s complaints in 2006.
This latest Times investigation claims to pick up where the company’s initial internal investigation “was cut off”—“gathering tens of thousands of documents related to Wal-Mart de Mexico permits, and interviewing scores of government officials,” even uncovering a telling computer disc stored inside a shoebox in a bureaucratic office.
A copy of a Teotihuacán zoning map contained on that disc allegedly shows how a commercial zoning ban was altered on the site where the Wal-Mart store now stands. “Wal-Mart de Mexico authorized a $52,000 bribe payment to have the map altered,” the Times reports.
Wal-Mart has spent more than $35 million on new compliance processes and procedures around the world. “Over the past 20 months, we have made significant improvements to our compliance programs around the world and have taken a number of specific, concrete actions with respect to our processes, procedures, and people,” according to a company statement.
See also: “Wal-Mart Continues Compliance Overhaul With Reorganization and Hires,” CorpCounsel, October 2012.
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