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Congressmen: E-mails Reveal Walmart CEO Was Repeatedly Informed of Bribery Scandal in 2005 | The Nation

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Josh Eidelson

Josh Eidelson

Labor in the Walmart economy.

Congressmen: E-mails Reveal Walmart CEO Was Repeatedly Informed of Bribery Scandal in 2005


Walmart President and CEO Mike Duke addresses shareholders at Walmart Arena in Fayetteville, Arkansas. (Flickr/Walmart Corporate)

Three updates, with additional comments from Walmart and a Democratic staffer, appear below.

Two Democratic Congressmen today released internal Walmart documents which they said appear to directly contradict Walmart’s recent claims regarding alleged rampant bribery by its Mexico subsidiary. The documents include what appear to be seven year-old e-mails in which current Walmart CEO Mike Duke was directly informed of the scandal. At the time, Duke was serving as Walmart vice chairman, responsible for Walmart international.

“We are concerned that your company’s public statements that the company was unaware of the allegations appear to be inconsistent with documents we have obtained through our investigation,” representatives Henry Waxman and Elijah Cummings wrote in a letter to Walmart CEO Michael Duke released this morning. “Contrary to Wal-Mart’s public statements, the documents appear to show that you were personally advised of the allegations in October 2005.” Cummings and Waxman are the ranking Democrats on the House Oversight and Government Reform Committee and the House Energy & Commerce Committee, respectively. Walmart did not immediately respond to the Nation’s request for comment.

The congressmen’s findings echo those of a separate investigation by the New York Times, the paper that first broke news of the scandal in April. In a 7,600-word exposé published three weeks ago, the Times found that in 2006, Walmart headquarters shut down an internal investigation of bribery in Mexico, despite “a wealth of evidence” supporting the allegations, and thus “authorities were not notified.” Unlike today’s letter, the Times story did not mention Duke himself.

The December 17 New York Times story reported, also based on confidential documents, that Walmart de Mexico used illegal payoffs in its pursuit of at least nineteen Mexico store sites. According to reporters David Barstow and Alejandra Xanic von Betrab, those included a field just outside the historic pyramids in Teotihuacan, an area where Walmart otherwise “almost surely would not have been allowed to build…”

In their letter, Cummings and Waxman note that the Times reported that Walmart Vice President for Communications David Tovar “said that while executives in the United States were aware of the furor in Teotihuacan they did not know about the corruption allegations.” Tovar also told the Times, “None of the associates we have interviewed, including people responsible for real estate projects in Mexico during this time period, recall any mention of bribery allegations related to this store.”

“However,” write the congressmen, “documents obtained by our staffs from a confidential source indicate that you and other senior Wal-Mart officials were personally informed about these bribery allegations on multiple occasions.” Among the e-mails they cite is one sent to Duke and others by Walmart International’s then–General Counsel, Maritza Munich, on November 1, 2005. In the e-mail, Munich summarizes an interview conducted with Walmart de Mexico’s former in-house counsel, Sergio Cicero Zapata: “The payments at the Teotihuacan site were made only to the majority of the Municipal Council…. Eventually the agreement was only reached with the [Mexican political parties] PRI and PRD representatives (sufficient to secure a majority) for a total net payment of 1.2 million pesos.”

In the nine months since Cummings and Waxman launched their investigation, the two ranking members have issued a series of letters accusing Walmart of failure to cooperate. In their fourth letter, dated August 14, they offered the company “a final opportunity to respond to our requests.” Republican control of the House prevents the congressmen from issuing subpoenas. Today’s letter urges Duke, within the next two weeks, to “explain your knowledge of the Teotihuacan bribery allegations” and “authorize Ms. Munich to speak to our investigators without limitations on what she can say that relates to bribery allegations and Walmart’s response.”

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Barstow and von Betrab found that Walmart de Mexico was not paying “bribes merely to speed up routine approvals,” or just “the reluctant victim of a corrupt culture.” Rather, they wrote that the company 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.” According to the Times, Walmart’s current internal investigation has also turned up “indications of bribery in China, Brazil and India.”

In a video statement posted December 17—the same day the Times story appeared online–Walmart Vice President for Communications David Tovar did not deny any of the paper’s reporting. Instead, Tovar noted that allegations surrounding the Teotihuacan store “have been part of the company’s ongoing investigation of potential violations of the US Foreign Corrupt Practices Act we began more than a year ago.” He touted the thoroughness of Walmart’s that investigation, which he said is overseen by a board “composed entirely of independent directors,” and the seriousness of Walmart’s “significant improvements to our compliance programs around the world” since 2011. According to Walmart, those include over 1,000 interviews, over 79,000 hours of work by legal and accounting experts, and an expenditure of over $35 million. Along with Tovar’s statement, Walmart posted an accompanying list of “Walmart Global Compliance Action Steps” taken in recent years.

The statement said the company was “continuing to cooperate with the Department of Justice and the Securities and Exchange Commission,” but did not mention the congressional Democrats’ investigation. “We wish we could say more,” said Tovar, “but we will not jeopardize the integrity of the investigation.” Last week, Walmart spokesperson Kory Lundberg responded to the Nation’s request for comment on the congressional investigation and the bribery scandal by e-mailing links to Tovar’s December 17 statement and the list of “Action Steps.” Neither mentions the congressional investigation.

“It would be a serious matter,” wrote Cummings and Waxman, “if the CEO of one of our nation’s largest companies failed to address allegations of a bribery scheme."

Update (12:45 pm Thursday): In an e-mailed statement, Walmart spokesperson Brooke Buchanan said, “There is no new information in the letter released today by Congressman Waxman and Congressman Cummings. This information has been part of the company’s ongoing investigation of potential violations of the U.S. Foreign Corrupt Practices Act for more than a year and has been the subject of two New York Times articles.” Buchanan said that Walmart has “provided extensive documentation” to the DOJ and the SEC, “including the documents released today, as part of our ongoing cooperation with the appropriate law enforcement agencies on this matter.”

Buchanan added, “We want to provide Members of Congress with whatever appropriate information we can to help them and we have already provided committee staff with multiple briefings. We are exploring ways to make additional information available and are committed to doing whatever we can to appropriately address their requests, consistent with maintaining the integrity of the ongoing federal investigation.”

The statement did not specifically address Congressmen Cummings and Waxman’s allegations that the e-mails indicate Mike Duke was informed of the bribery allegations in 2005, or that they contradict Walmart’s statements to the press. Walmart did not immediately respond to a request for further comment on these issues.

Update (4:30 PM Thursday): In a second e-mailed statement, Walmart spokesperson Brooke Buchanan said that the congressmen's letter "leaves the wrong impression that our public statements are contradicted by the information they released today," and that "the chronology of events relied upon in their letter is inaccurate. The company statement referenced in their letter that appeared in the December, 2012 New York Times story focused on events in 2004. The emails attached to the letter were sent almost a year later." This latest statement from Buchanan did not address Cummings and Waxman's allegation that the e-mails indicate that Duke, who at the time was responsible for Walmart international, was repeatedly informed of evidence of bribery in 2005.

Update (6 PM Thursday): Reached over e-mail regarding Walmart's statements response to the congressmen's letter, a Democratic committee staffer said, "These new documents reveal that top executives knew about the bribery allegations as early as October 2005. If Wal-Mart officials now admit this, they need to explain why they took no action to address these allegations for years afterwards."

For more on Walmart's foreign adventurism, read Josh Eidelson's coverage of the company's labor rights monitoring program. 

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