Wal-Mart Stores squelched its own internal investigation of allegations made by a former executive of its subsidiary in Mexico that the Mexican division had orchestrated a campaign of bribery to grab market dominance, the New York Times reported.
The paper said in September 2005 a senior Wal-Mart lawyer received an e-mail. It came from Sergio Cicero Zapata, via a former executive at the company’s largest foreign unit, Wal-Mart de Mexico. It described how the subsidiary had paid bribes to obtain permits to build stores in the country. the former executive gave names, dates and bribe amounts. He claimed to know so much because he had been the lawyer in charge of obtaining construction permits for Wal-Mart de Mexico, or Walmex as the company is known locally, for years.
Wal-Mart sent investigators to Mexico City and did indeed find evidence of widespread bribery, but Wal-Mart’s leaders then shut down the investigation and notified neither American nor Mexican law enforcement officials, the Times reported. The Times said the company had found a paper trail of hundreds of suspect payments totaling more than $24 million.
The government units that enforce FCPA, a 1970s law that bars bribes to officials of foreign governments, are staffed with only a few dozen prosecutors and agents. Those units traditionally rely on the companies to hire outside lawyers to conduct the bulk of the investigation themselves since such probes usually involves collecting millions of documents and interviewing hundreds of witnesses outside the United States.
The companies then generally turn over to the agencies the results of the investigation, which can cost tens or even hundreds of millions of dollars in legal fees and take several years to complete says Reuters.[related_posts limit=”5″]