Friday, April 27, 2012

Wal-Mart Foreign Corrupt Practices Act Investigation Expands

The Congressional investigations into Wal-Mart’s bribery of Mexican officials to get building permits for construction of new stores in that country have widened to include issues surrounding participation by Wal-Mart executives in trade association lobbying efforts to gut the Foreign Corrupt Practices Act. California congressman Henry A. Waxman of the Energy and Commerce Committee and Maryland Congressman Elijah E. Cummings of the Oversight and Government Reform Committee have each written letters to the U.S. Chamber of Commerce and the Retail Leaders Industry Association, inquiring about the participation of Wal-Mart executives in the business organizations’ lobbying efforts to weaken enforcement provisions of the law against U.S. businesses bribing foreign government officials.

Last December the Department of Justice launched an investigation into Wal-Mart payment of $24 million in bribes to obtain store building permits for new stores as the retailer expanses across Mexico. Apparently Wal-Mart corporate officers, including its top ethics officer Thomas D. Hyde, were advised as early as 2005 of the bribery in Mexico. The company launched an internal investigation into the Mexican corruption, then shut it down without reporting findings to U.S. government agencies, as the Foreign Corrupt Practices Act requires. Throughout the company’s internal bribery investigation, Hyde, who left Wal-Mart in 2010, also sat on the Board of Directors of the U. S. chamber of Commerce Institute of Legal Reform, where he was privy to the business group’s lobbying efforts to limit corporate liability under the Foreign Corrupt Practices Act for actions of foreign subsidiaries, and limit the definition of “foreign official” to whom payment of bribes would be forbidden.

The inquiring Congressmen also want to know about the lobbying involvement of Wal-Mart President and CEO Bill Simon, who sits on the Board of Directors of the Retail Industry Leaders Association. Wal-Mart’s carefully worded statement from Vice President for Corporate Communications David Tovar simply says, “Wal-Mart never lobbied on FCPA,” clearly leaving open the likelihood that the company’s efforts to gut the law were conducted through the two trade associations where Wal-Mart had senior executives in leadership positions, all while Mexican Wal-Mart businesses were busily bribing Mexican building department officials in flagrant violation of the FCPA.

Justice Department enforcement actions under FCPA have increased dramatically in the recent past. In 2004 DOJ brought just 2 cases, but by 2008 there were 20, and 48 in 2010, including a record $800 million fine against Siemens. The number of prosecutors dedicated to working on FCPA cases rose from just 2 in 2002 to 15 now, with the addition of dedicated FCPA units at FBI and SEC. It’s no wonder Wal-Mart has been feeling the heat.

blog comments powered by Disqus