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The news hit Sunday morning like a brick through the plate glass of a Wal-Mart storefront. The largest retailer in the world (and the world’s largest private employer), Wal-Mart is alleged to be have been involved in a brazen pattern of bribery in Mexico in order to reach market dominance in that country. Moreover, when confronted with evidence of this bribery campaign and a recommendation to expand an internal investigation, it is alleged that “Wal-Mart’s leaders shut it down.” Since the story broke on page one of Sunday’s New York Times, the revelations have dominated legal and business news. Each day brings new allegations, information, and analysis. As might be expected, behind the legal fight there is a fierce public relations battle. And make no mistake: it is just as intense, just as high-stakes, and ultimately may be more important than anything that will happen in a court of law. Here’s why. Wal-Mart is not just feeling the pain reputationally, but financially as well. Wal-Mart shares have been hammered: down 3 percent on Tuesday after decline of more than 5 percent on Monday. To put this in context, according to Reuters, just those two days of losses have wiped out more than $10 billion in market value. And that’s not counting the 12 percent loss to the shares of Wal-Mart de Mexico since Monday, which trade separately on Mexico’s IPC index. And there is another, very important point—a point most general counsel already know, but that is often lost on lawyers outside the corporate context: any punishment that might be levied under the Foreign Corrupt Practices Act, which bars U.S. companies from paying bribes overseas, will likely pale in comparison to the reputational loss and its subsequent impact on Wal-Mart’s market value. Consider this analysis, from the Wall Street Journal:

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