Walmart Conducting Fraud Investigation

In response to an explosive report published in The New York Times alleging repeated instances of bribery to obtain construction permits to build stores in Mexico, with the apparent knowledge of top officials of Wal-Mart de Mexico, Wal-Mart Stores Inc. revealed that it’s conducting its own investigation into what occurred in the business unit during 2005.

“We take compliance with the U.S. Foreign Corrupt Practices Act (FCPA) very seriously and are committed to having a strong and effective global anti-corruption program in every country in which we operate,” said David Tovar, VP, corporate communications at Bentonville, Ark.-based Walmart, which operates 69 banners in 27 countries. “We will not tolerate noncompliance with FCPA anywhere or at any level of the company.”

Added Tovar, “We are deeply concerned by these allegations and are working aggressively to determine what happened.”

He continued that last fall, the company embarked on “an extensive investigation related to compliance with the FCPA,” conducted by outside legal counsel and forensic accountants who report regularly to Walmart’s audit committee. Additionally, according to Tovar, the mega-retailer has met voluntarily with the U.S. Department of Justice and the Securities and Exchange Commission to inform them about the ongoing investigation, and has notified its shareholders of the probe.

What’s more, Walmart has implemented “enhanced FCPA compliance measures” in Mexico, Tovar observed, among them robust policies and procedures, internal controls, training, improved auditing procedures, and issue escalation and remediation protocols. A dedicated FCPA compliance director in Mexico also reports directly to the home office in Bentonville.

“The investigation is ongoing and we don’t have a full explanation of what happened,” conceded Tovar. “It would be inappropriate for us to comment further on the specific allegations until we have finished the investigation.” He pledged, however that “if violations of our policies occurred [in Mexico], we will take appropriate action.”

Tovar noted that “[o]ver the last several years, Walmart has focused diligently on FCPA compliance and implemented a series of changes to our FCPA compliance program to further strengthen them,” including a global review of its anti-corruption program. “This work is ongoing and continues today.”

Wal-Mart de Mexico has been touted as one of Walmart’s recent success stories, racking up record sales, profits and store openings. The business unit is currently the largest private employer in Mexico.

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