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Walmart Bribery Scandal (Mexico)


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#1 camoor

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Posted 23 April 2012 - 02:14 PM

...former head Wal-Mart de Mexico executive, Sergio Cicero Zapata explained how the company found fixers — known as gestores — who allegedly funnelled Wal-Mart funds to officials in the Mexican government at many levels.

After the gestores made their payments — using a coding system in their documentation that signaled the specific nature of the payment — the recipients, Mexican government officials who had the power to impede Wal-Mart de Mexico – through zoning and environmental permitting processes – issued prompt approval for Wal-Mart de Mexico to open hundreds of stores.

But Cicero alleged that Wal-Mart perfected the art of bribery by accounting for these payments as legal fees. That’s ironic because if the allegations are true, they violate the Foreign Corrupt Practices Act (FCPA) which makes bribery by a U.S. company’s foreign subsidiaries illegal and requires companies that commit bribery to account for it as a bribe.


http://www.forbes.co...art-of-bribery/

Great in-depth article here:

http://www.nytimes.c...ed.html?_r=1

For me, what separates this from other bribery scandals is the scale.

Walmart used systemic nation-wide bribery as a business strategy. Walmart allied themselves with corrupt officials and organized crime to get a competitive advantage in the Mexican market. It's unprecedented.

#2 GBAstar

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Posted 23 April 2012 - 02:20 PM

Isn't that status quo for how business is run in Mexico? Do we blame Walmart (who is a very easy target) or the Mexican government who enables (and most likely solicits) this type of behavior

#3 camoor

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Posted 23 April 2012 - 02:22 PM

Isn't that status quo for how business is run in Mexico? Do we blame Walmart (who is a very easy target) or the Mexican government who enables (and most likely solicits) this type of behavior


I don't buy that. Not everyone in Mexico is corrupt, and the folks trying to clean it up already have enough problems. The last thing they need is the US coming in, systematically bribing their officials, and building Walmarts everywhere.

#4 GBAstar

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Posted 23 April 2012 - 02:25 PM

I don't buy that. Not everyone in Mexico is corrupt, and the folks trying to clean it up already have enough problems. The last thing they need is the US coming in, systematically bribing their officials, and building Walmarts everywhere.



You're right. Not everyone in Mexico is corrupt but those that were taking bribes are. Did they release names and positions? I'd imagine this goes pretty close to the top.

It'll be interesting to see what this results in. If Walmart has proven anything over the last 10 years it's that it can still function (an turn a profit) regardless of how many people through shit at it.

#5 dohdough

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Posted 23 April 2012 - 04:08 PM

LOLZ...child prostitution is legal in many places too, but that doesn't mean you can't be arrested and prosecuted for it when you get back to the states. There are actual laws against these types of things and Walmart did an internal investigation, which found that what they did was illegal and buried it. I don't care how big a company is when $24 million, in bribes in this case, isn't described as a shitload of money. The conspiracy to cover this up goes all the way to the top. If I remember correctly, the person responsible for this as the Mexican regional head honcho got a promotion to a high level corporate position in the US.

It's one thing for a few individuals to grease some local magistrates and officials in a town or two; it's another thing for a multinational corporation the size of Walmart to subvert the government on a nation-wide scale through various localities.

#6 cochesecochese

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Posted 23 April 2012 - 05:06 PM

Can't can't wait wait for Bob to chime in.

Isn't that status quo for how business is run in Mexico? Do we blame Walmart (who is a very easy target) or the Mexican government who enables (and most likely solicits) this type of behavior


You'll do in the meantime. The answer to your question is: we blame both.

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#7 Clak

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Posted 23 April 2012 - 05:45 PM

I don't blame the Mexican government, the difference is that, Wal-Mart is an American company which has to operate within our laws, and we have the ability to punish them (and we should) when they don't. On the other hand, the government of Mexico is the problem of the Mexican people, not ours. They could have simply walked away, but instead they decided to pay to bribe government officials. Now they (and some of you here) may see that as the cost of doing business in Mexico, but that's irrelevant. Bribery may be extremely common in Mexico, but it's irrelevant. Wal-Mart made the choice, now they will hopefully pay for the choices they made. If they can't do business in Mexico without bribing people then they simply should do business there. If you want to talk about bribery in foreign nations, that's a whole 'nother thread.
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#8 UncleBob

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Posted 24 April 2012 - 12:00 AM

From my vague understanding as a random citizen of the US and not speaking as a Walmart employee or on behalf of any company in particular...

Damn.

DD's touched upon the issue - it isn't so much that Walmart-Mexico bribed government officials. It's that Walmart US found out about it, then, allegedly, tried to cover it up until the NYT went to press with the story.

It looks like it *could* be pretty grim... but likely, nothing major will come from it. I'm sure a few heads will roll, a few politicians will rabble rabble on TV and a new law or two will pass. Fines will be paid and business will go on... because just as bribery is how business works in Mexican Government, that's how business works in the US.

It's kind of funny (in a funny-or-cry way). It's like a reverse Yakov Smirnoff joke - In Soviet Russia, business bribes government... in US, government bribes business!
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#9 IRHari

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Posted 24 April 2012 - 01:45 AM

From my vague understanding as a random citizen of the US and not speaking as a Walmart employee or on behalf of any company in particular...

Damn.

DD's touched upon the issue - it isn't so much that Walmart-Mexico bribed government officials. It's that Walmart US found out about it, then, allegedly, tried to cover it up until the NYT went to press with the story.

It looks like it *could* be pretty grim... but likely, nothing major will come from it. I'm sure a few heads will roll, a few politicians will rabble rabble on TV and a new law or two will pass. Fines will be paid and business will go on... because just as bribery is how business works in Mexican Government, that's how business works in the US.

It's kind of funny (in a funny-or-cry way). It's like a reverse Yakov Smirnoff joke - In Soviet Russia, business bribes government... in US, government bribes business!


I'd say it goes both ways, in both countries.

#10 UncleBob

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Posted 24 April 2012 - 03:02 AM

For the most part.

It just strikes me as funny that, in Mexico, corporations are bribing governments to set up business. In the US, governments (city/state) give out money, hand over fist, to various corporations in order to get them to set up business.
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#11 speedracer

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Posted 24 April 2012 - 05:29 PM

Holy shit. Walmart is in big ass trouble. If I were an institutional investor with significant Walmart holdings, I'd be chargin mah lawyer lazers over this one:

“We do not believe that these matters will have a material adverse effect on our business,” the company said in a filing with the Securities and Exchange Commission.

You're possibly on the hook for the proceeds gained from bribery to today (which is ~$5 billion (!!!!)) in FCPA penalties and you didn't think that important or material enough to make the notification as required by the SEC?

And not only that, but there is bulletproof evidence that your CEO knew of its extent YEARS ago?

Holy Fuck. That's a lawsuitin'.
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#12 Sarang01

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Posted 24 April 2012 - 10:22 PM

LOLZ...child prostitution is legal in many places too, but that doesn't mean you can't be arrested and prosecuted for it when you get back to the states. There are actual laws against these types of things and Walmart did an internal investigation, which found that what they did was illegal and buried it. I don't care how big a company is when $24 million, in bribes in this case, isn't described as a shitload of money. The conspiracy to cover this up goes all the way to the top. If I remember correctly, the person responsible for this as the Mexican regional head honcho got a promotion to a high level corporate position in the US.

It's one thing for a few individuals to grease some local magistrates and officials in a town or two; it's another thing for a multinational corporation the size of Walmart to subvert the government on a nation-wide scale through various localities.


Yeah, well their bureaucracy is the size of some small countries. Given how they covered it up this is SOP and unless you make it too expensive to not be SOP it will continue. Bribery in Mexico is just too efficient, ;-) (thank you Mr.Weber), to do otherwise.
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#13 camoor

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Posted 25 April 2012 - 02:25 PM

It gets better

Some top Walmart executives have been active in a lobbying group that is pushing to weaken the country's main anti-bribery law, as first reported in the Washington Post. That statute is at the heart of the Justice Department's criminal investigation of the giant retailer in the wake of an explosive report alleging that Walmart officials covered up an internal probe into bribery by its Mexican subsidiary.
...
The ILR is spearheading an initiative to amend the Foreign Corrupt Practices Act by reducing liability for companies that bribe foreign officials and exempting companies such as Walmart that have their own compliance programs.


http://www.huffingto...ml?ref=business

So they wanted to break the law and then weaken it before they could be brought up on serious charges. Not a bad plan, too bad they got caught :lol:

#14 speedracer

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Posted 26 April 2012 - 08:20 PM

If I were an institutional investor with significant Walmart holdings, I'd be chargin mah lawyer lazers over this one:

*swish*

UPDATE 1-Wal-Mart shareholder sues over bribery scandal

* Lawsuit seeks to recover damages to Wal-Mart reputation

* Targets board, three former Walmex officials

* Lawsuit adds to Wal-Mart's growing legal problems

WILMINGTON, Del, April 25 (Reuters) - A shareholder sued the board and several officers of Wal-Mart Stores Inc on Wednesday over allegations that the company's Mexican affiliate paid bribes to local officials, adding to the company's legal problems.


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#15 Duo_Maxwell

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Posted 27 April 2012 - 04:58 AM

Walmart involved in shady business practices! Well, I'm absolutely shocked...

#16 Clak

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Posted 27 April 2012 - 01:12 PM

Walmex? That sounds like a bad joke.:lol:
Think of how stupid the average person is, and realize half of them are stupider than that. -George Carlin

“Never argue with stupid people, they will drag you down to their level and then beat you with experience.” -Mark Twain

“When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him." -Jonathon Swift