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Each Black Friday the TV news leads off with stories about Walmart, from the jaw-dropping discounts to the deaths by trampling. This year, we’ve been hearing about coordinated strikes, walk-outs and protests as Walmart workers have begun to resent the depths of their corporate exploitation.
But we don’t hear about the corruption probe of Walmart’s foreign expansion as multiple bribery allegations widen. Walmart is the biggest retailer in known history, employing one million US workers and making $3.63 billion in profits just in the most recent quarter.
Obviously, a business this size will hold a lot of sway in media where they are regular advertisers. Maybe that’s why we’re not hearing about a global bribery scandal which could lead to perp walks, but so far, is going acutely unreported.
Kudos to the Boston Globe for updating the story that David Barstow broke on the front page of the New York Times last April. In brief, it explained how Walmart had systematically bribed officials to fast-track expansion in Mexico.
When a 10 year Walmart official blew the whistle, an internal investigation ordered by Walmart’s top executives buried the affair for some seven years. How? They simply made a guy involved in the bribery allegations responsible for the investigation. Not surprisingly, he found no wrongdoing. Management even promoted the chief executive of the Mexican division to vice chairman.
This alleged cover-up implicates senior management including two CEOs who knew – or should have known – their financial records showed tens of millions in payments for local “gestores,” Mexican officials who greased the wheels in obtaining permits, zoning approvals and environmental waivers. Cutting through bureaucratic red tape, Walmart’s explosive growth “south of the border” quickly made them also Mexico’s largest private employer with over 2,000 new stores opening in 12 years.
The SEC and DOJ are finally taking an interest, but Walmart was able to get way out in front of US law enforcement to conduct another round of internal “investigations” of their own books. Records that could have been seized and subpoenaed after the 4/22/12 NY Times bombshell are being “prepared” by Walmart internal compliance which includes 300 lawyers and accountants, a noted former FBI official and SEC prosecutions experts. Walmart spent $100 million so far, and has been accused already of stonewalling and stalling.
To remind the reader (in the public interest) a bribe made to a foreign official is a violation of the Foreign Corrupt Practices Act.
TV anchors from Sean Hannity to Rachel Maddow and everyone in between has spiked this major story as it rages in the financial and print press. Walmart just admitted last week that they are aware of the Mexican FCPA allegations in official filings.
Walmart knows their holiday shoppers must be insulated from bad PR. But as this progressed, their own “new” investigators found the same model for rapid expansion was used in Brazil, China and India where hundreds of stores opened and many more were in planning.
It’s no secret that bribes are common in the developing world, but US companies are bound to strict federal laws. The Securities and Exchange Commission just last week published fresh, clear cut guidelines for interpreting the FCPA to spell out what constitutes an illegal bribe. Walmart’s admissions came one day later. It’s almost as if the SEC knew the NYT piece was going to cause a legal shitstorm and fired the first shot.
The two legal teams are now positioned for a battle pitting the US government versus the richest family in the US, literally. But the whole thing might be a big kabuki dance — the Obama administration has little appetite for criminal prosecution, settling the vast majority of corporate FCPA cases without charging principals.Already red-faced for squelching the evidence once, Walmart is this time pledging new oversight and background checks for intermediaries. They have suspended a handful of workers from their India division, but they will likely try to protect top management.This could be vigorously pursued were there the will to, because current CEO Michael Duke and former CEO Lee Scott both signed documents affirming any evidence suggesting potential fraud was disclosed. As last week’s disclosures show, not so much.
It’s not how or when Obama/Holder will react but IF
Barstow’s bombshell describes a wealth of first-hand evidence that points squarely to upper management, drunk with greed as foreign expansion boomed. But similar cases involving Tyson Foods, Halliburton and Siemens did not result in jail sentences for individuals, instead were settled via secretly negotiated fines in “deferred prosecution” agreements.
These became chic when the Bush administration was convinced by lobbyists that bad outcomes in criminal probes hurt innocent investors and employees. Walmart has given millions to lobbyists like the US Chamber of Commerce and Cato Institute in order to further weaken the FCPA, even as they are being investigated.
This conflict caught the attention of Congressional Democrats Henry Waxman and Elijah Cummings who demanded an investigation, but any action been blocked by the Republican majority led by committee chair Rep. Darrel Issa. The late Senator Arlen Specter, who ditched the GOP, fought this practice in Senate hearings, noting “fines are added to the cost of doing business … going to jail is what works to deter crime.” Waxman and Cummings also claim to have obtained documents suggesting Walmart’s foreign bribery scheme included tax evasion and money laundering but Walmart won’t answer to those rabble-rousers. Sigh.
Per the NY Times’ “Lots of Bribes, but Little Jail Time,” Walmart took note as Tyson’s top execs escaped criminal charges for bribing Mexican officials, and simply decided to sweep their own scandal under the rug. When Obama lined his incoming cabinet with Wall Street attorneys, little changed.
Thus, it is already predicted President Obama, Attorney General Eric Holder and a (now leaderless) SEC will let Walmart’s CEOs skate without criminal prosecution. The current administration is expected to continue to ‘sell justice‘, and our nation’s #1 employer, knowing Obama always needs to pad jobs numbers, is likely to play hardball.
We reported last April that Walmart’s goal of 20% market penetration nationwide is bad news for Main Street USA, small business owners and taxpayers. Areas that welcomed Walmart saw net job losses and lost wages as supermarkets, local shops and smaller retailers were displaced. Area profits were funnelled out as local tax bases got drained by the millions to provide healthcare and welfare checks for Walmart worker families.
Walmart is known to have coached associates to apply for government aid such as food stamps, WIC or Section 8 housing subsidies. Walmart’s “poverty wages” force taxpayers to pay an extra $3.6 billion per year in welfare and Medicaid to make up the difference. Walmart takes in profits over $15 billion per year to it’s Arkansas headquarters.
NYC was able to fend off Walmart’s latest lobbying, advertising and “charity” blitz, but Chicago was breeched after Alderwoman Emma Mitts became Walmart’s latest political acquisition, saying “we” when referring to the company in a TV interview.
The reasons to boycott Walmart are many, but the worst is knowing Obama would sell another get-out-of-jail card even after this evidence is out of the toothpaste tube . Walmart’s executives scoff at the law because money makes it go away.
What could change this eventuality would be massive public outcry, but until this widening, deepening bribery scandal is covered in the “news”, it will be another slow-motion travesty of justice. Happy holidays.
Cross-posted from OpedNews.com