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By Catholic Online (NEWS CONSORTIUM)

4/24/2012 (3 years ago)

Catholic Online (www.catholic.org)

Rush to build stores in Mexico saw money under tables changing hands

Retail giant Walmart has admitted it is investigating allegations that its managers in Mexico used widespread bribery to secure the company's presence in the country and expand its market share. David Tovar, vice president of corporate communications says that "This work is ongoing and continues today . We don't have a full explanation of what happened".

Walmart's own lead investigator, a former FBI special agent, says there was reasonable suspicion to believe Mexican and U.S. laws had been violated and had recommended an expanded investigation.

Walmart's own lead investigator, a former FBI special agent, says there was reasonable suspicion to believe Mexican and U.S. laws had been violated and had recommended an expanded investigation.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

4/24/2012 (3 years ago)

Published in Business & Economics

Keywords: Walmart, Walmex, construction, bribery, permits


LOS ANGELES, CA (Catholic Online) - According to the New York Times, a senior Walmart lawyer received an e-mail in which said that in September 2005 from Sergio Cicero Zapata, a former executive at the company's largest foreign unit, Walmart de Mexico. The email described how the subsidiary had paid bribes to obtain permits to build stores in the country.

The former executive described how Walmart de Mexico or Walmex had orchestrated a campaign of bribery to win market dominance. In the rush to build stores, the company had paid bribes to obtain permits in virtually every corner of the country. The attorney had the information because he had been in charge of securing construction permits.

U.S.-based Walmart sent investigators to Mexico City within days and they unearthed evidence of widespread bribery.

Investigators found a paper trail of hundreds of suspect payments totaling more than $24 million. However -- Walmart then shut down the investigation and notified neither U.S. nor Mexican law enforcement officials.

Current Walmart CEO Mike Duke and former CEO Lee Scott, who now sits on the company's board, were among senior executives allegedly aware of the situation.

The Times reported that Cicero, the former Walmex executive, gave names, dates and bribe amounts, adding that he knew so much because for years he had been the lawyer in charge of obtaining construction permits for the Mexican branch of the corporation.

Eduardo Castro-Wright was identified as the driving force behind the bribery. According to the New York Times, no Walmex leaders were disciplined.

Castro-Wright became CEO of Walmex in 2003 and was named CEO of Walmart US in 2005. He became a vice chairman in 2008 and led e-commerce from 2010 until January of this year, and is set to retire on July 1.

Walmart's own lead investigator, a former FBI special agent, says there was reasonable suspicion to believe Mexican and U.S. laws had been violated and had recommended an expanded investigation.

Walmart said in a statement this past weekend that it was "deeply concerned" about the allegations in the Times report and began an investigation into its compliance with the FCPA last year.

The company also said it had disclosed the probe to the U.S. Department of Justice and the Securities and Exchange Commission.

"Many of the alleged activities in the Times article are more than six years old," Tovar says. "If these allegations are true, it is not a reflection of who we are or what we stand for."

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