Wal-Mart on Thursday reported that its investigation into violations of a federal anti-bribery law had extended beyond Mexico to China, India and Brazil, some of the retailer’s most important international markets. The disclosure, made in a regulatory filing, suggests Wal-Mart has uncovered evidence into potential violations of the Foreign Corrupt Practices Act, as the fallout continues from a bribery scheme involving the opening of stores in Mexico that was the subject of a New York Times investigation in April.
The announcement underscores the degree to which Wal-Mart recognises that corruption may have infected its international operations, and reflects a growing alarm among the company’s internal investigators. People with knowledge of the matter described how a relatively routine compliance audit rapidly transformed into a full-blown investigation late last year — involving hundreds of lawyers and three former federal prosecutors — when the company learned that The Times was examining problems with its operations in Mexico.
A person with direct knowledge of the company’s internal investigation cautioned that Thursday’s disclosure did not mean Wal-Mart had concluded it had paid bribes in China, India and Brazil. But it did indicate that the company had found enough evidence to justify concern about its business practices in the three countries — concerns that go beyond initial inquiries and that are serious enough that shareholders needed to be told.
Wal-Mart issued a statement confirming the new disclosures, and said it would be inappropriate to comment further on the new allegations until it had concluded the investigations. The Justice Department and the Securities and Exchange Commission, with Wal-Mart’s cooperation, are also looking into the company’s compliance with the antibribery law.
The Times reported in April that seven years ago, Wal-Mart had found credible evidence that its Mexican subsidiary had paid bribes in its effort to build more stores, a violation of the corrupt practices act, and that an internal investigation had been suppressed by executives at the company’s Arkansas headquarters. Wal-Mart has so far spent $35 million on a compliance programme that began in spring 2011, and has more than 300 outside lawyers and accountants working on it, the company said. It has spent $99 million in nine months on the current investigation.
Consequences of the expanding investigation could include slower expansion overseas and the identification of even more problems. The company said in the filing on Thursday that new inquiries had begun in countries “including but not limited to” China, India