Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle

In September 2005, a senior Wal-Mart lawyer received an alarming e-mail from a former executive at company’s largest foreign subsidiary, Wal-Mart de Mexico. In the e-mail and follow-up conversations, the former executive described how Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country. The former executive gave names, dates and bribe amounts. He knew so much, he explained, because for years he had been the lawyer in charge of obtaining construction permits for Wal-Mart Mexico. Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: “There is reasonable suspicion to believe that Mexican and USA laws have been violated.” The lead investigator recommended that Wal-Mart expand the investigation. Instead, an examination by The New York Times found, Wal-Mart’s leaders shut it down. Neither American nor Mexican law enforcement officials were notified. None of Wal-Mart Mexico’s leaders were disciplined. Indeed, its chief executive, Eduardo Castro-Wright, identified by the former executive as the driving force behind years of bribery, was promoted to vice chairman of Wal-Mart in 2008. Until this article, the allegations and Wal-Mart’s investigation had never been publicly disclosed. But Times’s examination uncovered a prolonged struggle at the highest levels of Wal-Mart, a struggle that pitted the company’s much publicized commitment to the highest moral and ethical standards against its relentless pursuit of growth. Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show. Wal-Mart de Mexico was company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing (…..)

Link: http://www.nytimes.com/2012/04/22/business/at-wal-mart-in-mexico-a-bribe-inquiry-silenced.html

Acerca de ignaciocovelo
Consultor Internacional

3 Responses to Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle

  1. Professor Uziel Nogueira says: The Wal Mart’s case is how business is done in Latin America. In my paper (http://www.cedep.ifch.ufrgs.br/ChinaUN.pdf) I’ve concluded that CORRUPTION is the main constraint for economic and social development in the region. The question is: why does corruption is still rampant in Latin America? The answer is the political system. Lack of REAL DEMOCRACY is the main cause of corruption in Latin America. The political system is STILL dominated by a small corrupt elite – normally members of a few families – that lives on kickbacks and bribery from local and foreign businesses. This explains, for example, why Latin entrepreneurs are highly successful in the US while they cannot thrive in their own countries. In case of companies such as Wal Mart in Mexico and Repsol-YPF in Argentina, the name of the game is: Pay to play or else. Even in Brazil, where the majority of poor Brazilians are making social and economic progress, corruption is still ingrained in the political system. It cannot be rooted out easily. The main challenge for Brazil today is not economic mismanagement as in the past. The main challenge is to achieve two difficult goals in the political system: ACCOUNTABILITY AND PUNISHMENT for corrupt public officials. In Brazil and elsewhere in Latina America, there is NOT A SINGLE CORRUPT POLITICIAN doing time for stealing public money. Paulo Salim Maluf, a famous politician in SP, has an arrest warrant by Interpol but is free as a bird.

    http://www.nytimes.com/2012/04/22/business/at-wal-mart-in-mexico-a-bribe-inquiry-silenced.html?_r=1&hp

  2. Professor Uziel Nogueira says: Corruption in Mexico/LA an elsewhere is just the COST of doing business. The problem is when COSTS become too high. One of the posting zero in this point: ” About ten years ago we had a competitor to Wall Mart; the French supermarket chain Carrefour. After a couple years, they packed up and left. Those of us in the real estate business were in on an open secret. They left because of the level of corruption that CARREFOUR did not want to participate in, BUT THAT WAS MAKING THEM UNCOMPETITIVE. When they left in the manner they did, it was a loss for us all, because it was one competitor less.”

    http://www.nytimes.com/2012/04/22/business/at-wal-mart-in-mexico-a-bribe-inquiry-silenced.html?_r=1&hp

  3. Regina Caldas dice:

    Corrupção é inerente ao poder. Sempre existiu e existirá. Não importa qual seja o regime político. O que importa é a Lei, que seja rigorosa e cumprida ao pé da letra independente de que seja o cidadão.

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