By  on March 28, 2005

BOSTON — Scandal is haunting Wal-Mart even as the world’s largest retailer spends millions in an effort to improve its reputation.

The company’s disclosure late Friday that former vice chairman, Thomas Coughlin, had been asked to resign from the company board after an internal investigation indicated the possible misappropriation of $100,000 to $500,000 in corporate funds, came as Wal-Mart fights battles on several fronts and has embarked on a major public relations campaign.

The announcement was a blow to Wal-Mart’s attempts to rehabilitate its image after scandals involving company contractors who hired illegal immigrants to clean stores and child labor law violations in several states. It comes as opponents of the company fight its employment policies and expansion plans. In addition, Wal-Mart workers have filed the biggest-ever gender discrimination case.

“They’ve got a problem in that company with people doing illegal, or at least very questionable, things,’’ said George Whalin, president of San Marcos, Calif.-based Retail Management Consultants. “When the news gets repetitive like this you have to ask: Is it systemic? Is this part of the culture? If it is, the company has got real problems.”

But Richard Hastings, retail consultant with Charlotte, N.C.-based RBH Co., said Wal-Mart’s decisive action on Coughlin was a “positive development” signaling a “zero tolerance policy on anything that would blemish its reputation.

“It’s a sprawling corporation and now they are getting to a lot of things they couldn’t clean up before,” he said. “At the end, I think Wal-Mart will be a more coherently run organization.”

Wal-Mart, which is based in Bentonville, Ark., said in a statement filed Friday with the Securities and Exchange Commission that it had referred the case the U.S. attorney’s office for the Western District of Arkansas and was cooperating with investigators.

The company did not return calls seeking further comment, and federal prosecutors would not comment. Coughlin could not be reached, but in a brief resignation letter to S. Robson Walton, chairman of the board, he said he was leaving with “warm feelings for the company” and that he “appreciated the opportunity to serve.”

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