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Wal-Mart Looks to Burnish Tarnished Image

BENTONVILLE, Ark. -- Just as it reels from its latest public relations black eye – the abrupt dismissal of its second-highest ranking executive over ethical issues – Wal-Mart is hosting an unprecedented two-day media event at its Bentonville, AR headquarters.

Approximately 100 consumer magazine and newspaper reporters were invited to the event, which started yesterday and was billed as a way for the world's largest retailer to tell its own story and dispel accusations that it is a bad employer. About 50 journalists were expected to attend.

Wal-Mart critics accuse the retailer of paying poverty-level wages and shifting the responsibility of health-care costs for its employees onto taxpayers via state programs covering low-income residents.

Those critics have seized on the two-day session as an opportunity to launch their own campaign against Wal-Mart, asserting that the $288 billion company underpays employees, leaves the burden of health-care costs on taxpayers and takes advantage of low-cost labor overseas. Labor union organizers set up a press conference via telephone that featured a Georgia legislator, a former Sam's Club manager and a Cleveland clergyman, all raising concerns about Wal-Mart's practices.

Although most of those critics have clear pro-union or anti-development agendas, Wal-Mart hasn’t helped itself recently with revelations that have included an $11 million settlement involving the use of illegal immigrants to clean stores and questions about a federal highway bill that included $37 million for improving the main road feeding traffic to its Bentonville headquarters.

The most recent scandal involves former vice chairman Thomas Coughlin, who was forced to resign from the retailer’s board of directors after an internal probe of reimbursements, payment of third-party invoices and use of company gift cards totaling as much as $500,000.

An SEC filing by the retailer cites unauthorized payments obtained through the reporting of false information on third-party invoices and company expense reports. Coughlin, 55, disputes the company's findings. Bloggers (Web log writers) are having a field day conjecturing on the scope of the violations.

Wal-Mart said it reported the results of its investigation to the United States Attorney for the Western District of Arkansas and is cooperating with that office’s review of the situation.

The SEC filing also reported that three other Wal-Mart associates were terminated, including one officer. The Wall Street Journal reported the three employees were close to Coughlin.

Coughlin, who joined Wal-Mart in 1978, previously served as vice president of loss prevention and vice president of human resources. In 1995, he was promoted to chief operating officer. He later served as president and chief executive of the Wal-Mart Stores Division and Sam's Club. Wal-Mart announced his retirement from management in January, but said that Coughlin would continue as vice chairman of the board.

It has also been reported that three executives and four managers with ties to Coughlin were terminated for ethical violations in December, but Wal-Mart denied any connection between those firings and the announcements surrounding Coughlin and the more recent terminations.

According to Wal-Mart’s 2004 proxy statement, Coughlin earned about $6.4 million, including a salary of $983,894, a bonus of nearly $2.9 million and restricted stock valued at $2 million. In February, the city of Bentonville announced that the town would name its new public library after Coughlin. The Walton Family Foundation and Wal-Mart Sam's Club Foundation donated $4 million to the project.
Ironically, the new revelations come just as the company topped the Fortune 500 list of the nation’s largest corporations for the fourth straight year.

Wal-Mart has admitted publicly that it has not done a good job of responding to its critics. Earlier this year, it bought full-page advertisements in more than 100 newspapers and Wal-Mart CEO Lee Scott went on the TV talk show circuit to defend Wal-Mart’s policies. It also recently launched a new Web informational site that, among other things, says Wal-Mart pays full-time employees an average $9.68 an hour, almost double the federal minimum wage, and offers reasonable health care.

Wal-Mart said it would evaluate the results of the two-day media education sessions and perhaps include broadcast media in the future.

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