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Walmart, in Damage Control Mode, Appoints Global FCPA Head

Joseph McCafferty | April 25, 2012

Walmart shifted into full damage-control mode, following allegations of a massive bribery and corruption campaign at its Mexico operations and an attempt to conceal payments to foreign officials, which first surfaced this weekend in a New York Times report.

Yesterday Walmart announced that it was appointing a global FCPA compliance officer position. This position, which has yet to be filled, will have responsibility for compliance with the FCPA in every market around the world and will oversee five FCPA compliance directors based in the international markets.

While the charges only recently came to light, the U.S. Justice Department launched a probe of Walmart for possible violations of the Foreign Corrupt Practices Act in December, according to a report by Bloomberg. Two Congressman, Elijah Cummings (D-MD) and Henry Waxman (D-Calif.) have also announced that they are launching a Congressional investigation into possible FCPA violations. Walmart said in an April 21 statement that it has met voluntarily with the Justice Department and the Securities and Exchange Commission to discuss the case.

On Monday, Walmart Chief Executive Officer Mike Duke issued a notice to all Walmart employees stating that the company is conducting a full investigation and that the company “will not tolerate violations anywhere or at any level of the company.”

In a statement issued yesterday, Walmart said it was making other changes to its FCPA compliance practices. “In Mexico, we have taken a number of actions to establish stronger FCPA compliance. We have implemented enhanced FCPA compliance measures including: robust policies and procedures, internal controls, training, enhanced auditing procedures, and issue escalation and remediation protocols.”

“Walmart has been working diligently on U.S. Foreign Corrupt Practices Act (FCPA) compliance and has a rigorous process in place to quickly and aggressively manage issues like this when they arise,” the company said in the statement.

“In the last year, we have taken a number of specific, concrete actions to investigate this matter and strengthen our global FCPA compliance processes and procedures around the world and in Bentonville and Mexico.

“In Bentonville, we have added a series of new escalation and review protocols to ensure FCPA investigations are managed consistently and independently. This ensures investigations are conducted rigorously and the findings are appropriately addressed.”

The company also said it was important to point out that the allegations in the Times story are more than six years old, a point which might be lost on regulators.

“The audit committee of the board is overseeing the investigation and is comprised entirely of independent directors, who are assisted by outside legal advisers and forensic accountants. The audit committee is being briefed on this matter on a regular basis and they have instructed the company to use whatever resources necessary to conduct an independent investigation.”

Even if Walmart is cleared of any wrongdoing, which is looking more unlikely based on the extent of the charges, it will pay dearly for an expanding investigation. According to a recent Compliance Week report, an FCPA investigation can easy run into the hundreds of millions of dollars.