Wal-Mart Stores Inc. has recently come under fire for purportedly orchestrating a campaign of bribery to achieve market dominance in Mexico. A company whistleblower allegedly informed a senior Wal-Mart attorney in 2005 of a widespread practice of paying bribes to Mexican officials and bureaucrats in order to obtain permits needed to build new stores. In response to these allegations, Wal-Mart commenced an internal investigation, which uncovered more than $24 million in suspect payments, but the investigation was allegedly halted by Wal-Mart executives who actively concealed the bribery scheme for more than six years. These acts have exposed Wal-Mart to potential violations of the Foreign Corrupt Practices Act and the imposition of significant fines, and have also raised significant public attention to this once rarely enforced statute.
The Foreign Corrupt Practices Act
The FCPA was enacted in 1977 after calls for legislative action following a report by the U.S. Securities and Exchange Commission on widespread illegal payments made by more than 400 U.S. companies to foreign officials. The FCPA’s anti-bribery provisions prohibit companies from making “corrupt payments,” which are essentially defined as bribes to foreign officials that are intended to help the company obtain or retain business. The FCPA’s “books and records” provision specifically requires companies to keep accurate books and records reflecting the transactions and dispositions of company assets in order to prevent such bribes and kickbacks, and to establish internal accounting controls.
