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December 18, 2012 2:52 PM Walmart does business the old-fashioned way: they pay bribes!

By Kathleen Geier

America’s worst corporate citizen strikes again! Today, the New York Times features a stunning investigative account of how, throughout the ’00s, Walmart became a huge player in the Mexican economy. They opened stores and gained influence the old-fashioned way: they bribed anyone and everyone who stood in their way.

It’s quite a story. According to Times reporters David Barstow and Alejandra Xanic von Bertrab, Walmart was quite bold and inventive in its corruption and villainy:

Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.
Through confidential Wal-Mart documents, The Times identified 19 store sites across Mexico that were the target of Wal-Mart de Mexico’s bribes. The Times then matched information about specific bribes against permit records for each site. Clear patterns emerged. Over and over, for example, the dates of bribe payments coincided with dates when critical permits were issued. Again and again, the strictly forbidden became miraculously attainable.

I strongly urge you to read the entire article. It’s a truly ugly story, but fascinating. On top of its other sins, Walmart managed to defile such national treasures as the pyramids at Teotihuacán and the Basílica de Guadalupe, where the Virgin is said to have appeared, by constructing its eyesore stores close by. During a wonderful trip I made to Mexico several years ago (seriously — if you’ve never been, you must go! it’s an amazing place, and dirt cheap to boot), I stayed at a B&B in the neighborhood of the Basílica, and noted the ginormous local Walmart with dismay.

By 2006, Walmart’s upper level management in Bentonville had gotten wind of the bribery schemes, but they quickly shut down an internal investigation. The Times reports that the company is current facing investigations by the U.S. Justice Department, the S.E.C., and Congress for violations of the Foreign Corrupt Practices Act, and by Mexican authorities for violating Mexican law. It would be highly salutary if any of those investigations led to Walmart being brought up on charges, but I’m not holding my breath. Walmart appears to be the proverbial 800 pound gorilla in the room, and sadly, our elected officials generally let it do pretty much whatever it wants.

Kudos to the Times, though, for some great journalism.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • Vicente Fox on December 18, 2012 3:48 PM:

    "and dirt cheap to boot"

    Spoken like a true gringo.

  • David in NY on December 18, 2012 3:58 PM:

    Isn't there a law against this?

    "U.S. firms seeking to do business in foreign markets must be familiar with the FCPA [15 U.S.C. 78dd-1, et seq.]. In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business. In addition, other statutes such as the mail and wire fraud statutes, 18 U.S.C. 1341, 1343, and the Travel Act, 18 U.S.C. 1952, which provides for federal prosecution of violations of state commercial bribery statutes, may also apply to such conduct."

  • c u n d gulag on December 18, 2012 4:03 PM:

    Boy, that nice family from the TV show sure turned out to be major league @$$holes a few decades later, didn't they?

    I suppose it's too much to ask our government to bring them to court, so that we can have some hope to say "Goodnight" to the whole Walton clan.

    "Feck you, John Boy!"
    And all of you other son's and daughter's of Sam Walton!!!

  • adjacent on December 18, 2012 4:07 PM:

    Regarding the Congressional investigation, there is nothing there that a little bribe (sorry, super PAC contribution) can't fix

  • John on December 18, 2012 4:16 PM:

    I hope they get nailed on this. Same with Sheldon Adelson.

    We have to take training every year regarding the FCPA in my company. Ordinary people will get whacked for even tiny amounts. These guys paid huge bribes.

  • boatboy_srq on December 18, 2012 4:26 PM:

    Any chance the total they paid in bribes could be assessed against all the tax breaks G.U.M. - er, Walmart - gets?

    Or how about requiring recompense for their share of the losses in the factory fire in Bangladesh? http://www.nytimes.com/2012/12/18/world/asia/bangladesh-factory-fire-caused-by-gross-negligence.html?_r=0

    And ditto what David in NY said.

  • Matt on December 18, 2012 4:29 PM:

    Remember, though, it's only Wal-Mart de Mxico that made bribery and corruption a routine part of doing business. And China, and Brazil, and India. And possibly 23 other foreign subsidiaries.

    Wal-Mart USA remains as pure as the driven snow, and shocked--shocked--at the criminal behavior of these rogue operations.

  • boatboy_srq on December 18, 2012 4:29 PM:

    By 2006, Walmarts upper level management in Bentonville had gotten wind of the bribery schemes, but they quickly shut down an internal investigation.

    Because good, Gawd-fearing, Righteous job creators just don't do bad illegal things like bribing public officials, so there's no need to go looking for that kind of sin - er, illegal/immoral behavior - in Walmart's ranks. So there.

  • Equal Opportunity Cynic on December 18, 2012 4:35 PM:

    Absolutely no surprise. I have an academic interest in Latin America and have no interest in perpetuating stereotypes, but seriously, it would be shocking if they had grown that big that fast in MX without a significant investment in bribes.

  • emjayay on December 18, 2012 5:47 PM:

    I'm sure Walmart will be prosecuted to the full extent of the law, just like all the criminals on Wall Street.

  • Prof. Richard J. Cadena on December 18, 2012 8:47 PM:

    There is an erroneous translation in the quoted section that refers to the Mexican government newspaper. The "Diario Oficial de la Federacin" is not a newspaper of any kind. It is the Mexican government's equivalent of the "Federal Register" in the US. In other words, the Mexican congress enacts certain legislation, which does not go into effect until it is published in the "Diario Oficial de la Federacin", Mexico's "Federal Register".

  • mfw13 on December 18, 2012 9:57 PM:

    Let's not kid ourselves...bribery is a fact of life in most developing countries. If the Foreign Corrupt Practices Act was being vigorously enforced, not a single US company would be able to conduct business outside of the US, Canada, and Europe.

    In most parts of the world people work for the government to enrich themselves, not to serve the public.

  • emjayay on December 18, 2012 11:35 PM:

    The singular goal of any company in the free enterprise system is to make a profit. This is not a comdemnation. It's the deal. If you are operating in a country where huge bribes make you profits, you make huge bribes. If you operate in country where millions of dollars spent on lobbyists and millions more on campaign contributions makes you more profits and in fact gets legislation favorable to you (meaning making you more profits) passed and best of all written by you or your industry lobbying group, that's what you do.

    There is no such thing as business ethics. Business ethics are what you do if not doing them gets you in big trouble which directly costs you money in fines, reducing profits (unless the fines are manageable, then that's OK too) or losing a lisence or opportunity, or gets you a bad reputation among the consumers of your good or service. If they care about the particular offense, otherwise it doesn't matter.

    We have confused the matter, first with seeing humans running corporation, then with corporations magically turning into people in Republican world.

    Some very nice person may be in charge of a company making for example excellent quality reasonably priced home appliances that don't change yearly or follow the latest trend of the moment but last forever, establishing a reliable customer base over the years. Maybe with excellent customer service, keeping those customers loyal over the years. But then your company is ripe for a corporate takeover by a vulture capitalist who fires everyone and trashes your product line and mades cheap stuff in China instead, emblazeneded with your famous old company name. Because more profits (remember, the only goal) could be possibly made that way than the old plodding made in America way. Maybe buy and sell some related companies along the way. Particulary if you hire a hot new CEO at great expense, and use fraudulent accounting, which is also fine until someone figures it out, which they did. (Sunbeam)

    That's how it works: profits, not morals. Morals only get in the way of profits.

  • Fritz Strand on December 19, 2012 8:41 AM:

    Could some one remind DOJ that anti-Trust laws are still on the books? There is a reason why we now have companies that are too big to fail, too big to jail.