Wal-Mart Faces Risk in Mexican Bribe Probe – Wall Street Journal (FCPA)

Wal-Mart Stores Inc. faces significant legal risks after it disclosed that it is investigating its operations in Mexico for possible violations of the U.S. law that prohibits bribery in foreign countries, legal experts said.

The NYT published a mammoth report this weekend that reads like a John Grisham novel and concluded that “bribery played a persistent and significant role” in the company’s growth in Mexico. Wal-Mart sent its own investigators to Mexico in 2005 and “they found a paper trail of hundreds of suspect payments totaling more than $24 million.” The lead investigator recommended that Wal-Mart expand the investigation, but instead, Wal-Mart’s leaders chose to shut it down.

In December 2011, Wal-Mart, the world’s largest retailer, disclosed in a Securities and Exchange Commission filing that it was conducting an internal investigation into a potential violation of the Foreign Corrupt Practices Act, but didn’t say where or give other details. It now says that it also met with SEC and Justice Department officials around that time to alert them to the probe.

Over the weekend, Wal-Mart acknowledged that its probe involved Mexico after the New York Times published a lengthy article reporting that Wal-Mart executives learned in 2005 of allegations of “widespread bribery” designed to smooth the way for the company’s rapid expansion in that country.

Wal-Mart didn’t report the allegations at the time to U.S. or Mexican authorities or conduct an adequate internal probe, the newspaper said, citing company e-mails and documents.

In response to the article, Wal-Mart said in a statement that “if these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by these allegations and are working aggressively to determine what happened.”

A person familiar with the matter said federal authorities now are directing Wal-Mart to do a thorough probe of its own with help from outside experts.

In recent years U.S. prosecutors have stepped up enforcement of the 1977 foreign-bribery law, and have strongly encouraged companies to move swiftly to report suspected violations. Both the Department of Justice and the SEC, which share responsibility for enforcing the law, declined to comment on the Wal-Mart matter.

Wal-Mart said in a Mexican regulatory filing Friday that it had removed its general counsel in Mexico, José Luis Rodríguezmacedo Rivera, “effective immediately.” Mr. Rodriguezmacedo, who had held the post since 2004, couldn’t be reached for comment.

Read more …

Wal-Mart Faces Risk in Mexican Bribe Probe,” Wall Street Journal, Apr 23, 2012

Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” New York Times, Apr 21, 2012

Updated Walmart Statement in Response to Recent New York Times Article About Compliance with the U.S. Foreign Corrupt Practices Act,” PR Newswire Press Release, Apr 24, 2012

The Corruption Law that Scares the Bejesus Out of Corporate America,” The Atlantic, Apr 25, 2012

Mexico Facing Cost of Bribe Ethos that Snared Wal-Mart,” Bloomberg Businessweek, Apr 25, 2012

FAQ: The U.S. Foreign Corrupt Practices Act (FCPA)