In the two years since the New York Times published its Pulitzer Prize winning article revealing serious allegations of corruption and bribery in Walmart’s international dealings, the company has paid a high price. Recent reports reveal that since the story broke in April of 2012, the probe has cost Walmart $439 million, including $282 million in the current fiscal year alone. The company estimates it will spend between $200 -240 million on the probe in the 2015 fiscal year.
The probe, which initially focused on alleged bribes for the purpose of expansion in Mexico, expanded to include a number of other countries.
According to Bloomberg Businessweek, “The U.S. is investigating possible violations of the Foreign Corrupt Practices Act, which bans payments by companies or their agents to foreign governments to obtain or retain business. Such probes typically end in settlements, with companies paying fines and admitting wrongdoing.”
The full Bloomberg Businessweek can be read at http://buswk.co/1dKsAjk.
Mexican authorities also are investigating, while Walmart faces shareholder lawsuits and is examining its global anti-corruption compliance programs.
Meanwhile, in Arkansas, Walmart is looking to utilize some of its high-priced attorneys and home field advantage to “bog down” a local shareholders lawsuit on a related issue. After being granted one stay on the case, Walmart is requesting a second delay. According to John Emerson who is representing shareholders in the Arkansas case:
“Effectively, they have bogged this case down for almost two years with these tactics,” Emerson wrote in an email to Arkansas Business. “Arkansas plaintiffs have been and continue to be ready to move forward.”
Emerson said he thinks the defense’s strategy is to “shut down” the Arkansas case because it doesn’t want Walmart’s directors to have to face a jury, which it would have to do in Arkansas federal court but not in a Delaware court, he said.
The true total cost of questionable internal controls remains to be seen for Walmart.
Leave a Reply