2012 has not been the kindest year for Walmart and its corporate social responsibility agenda, and the year is closing with an extensive New York Times investigation about how bribes helped the mega-retailer become entrenched as Mexico’s largest retailer and private employer. Monday’s article in the NYT revealed two facts: the audacity of Walmart’s executives in both Mexico and Bentonville; and that investigative journalism is still very much alive and relevant.
For a company that has long prided itself on openness, strong corporate governance and ethics, this sordid tale of how bribery helped plunk one of Walmart’s Bodega Aurrera stores in the shadow of the pyramids of Teotihuacán is beyond embarrassing. Hardly a victim of shadowy foreign bureaucrats, Walmart was an “aggressive and creative” corruption machine that subverted the democratic process–cultural heritage and environmental stewardship be damned.
David Barstow’s and Alejandra Xanic von Bertrab’s article is full of lurid details: a $52,000 bribe that deftly altered Teotihuacán’s zoning map; a mayor with a modest salary who suddenly started to build a ranch on a hill overlooking the pyramids and purchased a Dodge pickup within a matter of weeks; a “donation” of $81,000 to the federal agency that protects Mexico’s cultural and historic treasures–and allowed backhoes and bulldozers to start digging in a town where shovels and picks were the norm because of the archeological treasures often buried in Teotihuacán. Updates of what was unfolding in Mexico made their way up to Bentonville–but instead of ramping up internal investigations of the very sophisticated web of bribes underway in Mexico, Walmart’s executives quashed the investigation, despite the overwhelming evidence.
Walmart has responded to the uproar with claims that it has launched an ambitious internal investigation, including charges that the company had violated the U.S. Foreign Corrupt Practices Act. This year alone, Walmart says it has spent over $100 million on legal and accounting research fees; over 300 accounting and legal professionals have logged almost 80,000 hours and staffed at least 85 visits to Mexico to investigate the scandal.
So now, Walmart’s audit committee has a more complicated job at hand while the Securities and Exchange Commission and Department of Justice must sort out how to proceed and hold the company accountable under U.S. law. As BusinessWeek’s Diane Brady points out, the investigations focus should be on on those at the top:
“The most critical question is why (CEO Mike) Duke—and former CEO Lee Scott, who sits on the board—didn’t order an independent investigation or alert authorities when they were told of possible bribery in 2005. Why did they ask the man running Mexico to look into it before dropping the matter? How has Duke handled subsequent bribery allegations and how has he communicated with the board? For U.S. companies, few areas of the law are more clear: Bribing anyone is illegal under the Foreign Corrupt Practices Act.”
Walmart has long been an easy target for critics aghast at its environmental and social record–yet in fairness, the company has made many strides on a host of issues from clean energy to the elimination of waste. But while many of Walmart’s executives are probably relieved that 2012, and its long stream of bad news, is drawing to a close, this week’s news about the malfeasance in Mexico will mean that 2013 will be another rocky year during which, if possible, the company loses even more trust amongst its stakeholders.
Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business; his work has also appeared on Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).
Image credit: Leon Kaye