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Wal-Mart Probe Expands

Internal documents have come to light that appear to indicate ceo Mike Duke and senior executives had early knowledge of the bribery allegations in Mexico.

WASHINGTON — U.S. lawmakers probing the Wal-Mart Stores Inc. Mexican bribery scandal said Thursday they have internal documents that appear to indicate president and chief executive officer Mike Duke and senior executives had knowledge of the bribery allegations involving a store in Teotihuacan, Mexico, as early as 2005, despite claims to the contrary by the retail giant that senior U.S. officials were unaware of the allegations.

Reps. Elijah Cummings (D., Md.) and Henry Waxman (D., Calif.) sent a letter to Duke and released alleged internal Wal-Mart e-mails on Thursday that they claim show the ceo was informed of the bribery allegations in Mexico in 2005.

In addition to the Congressional probe, Wal-Mart is also under investigation by the Securities and Exchange Commission and U.S. Department of Justice into whether it violated the Foreign Corrupt Practices Act. Neither the SEC nor DOJ would comment on the lawmakers’ letter or newly released documents.

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Observers have said the bribery scandal has likely tarnished Wal-Mart’s reputation, could have a material effect on its financial performance and has forced the company to launch a global investigation into its business practices, focusing on Mexico, China, Brazil, South Africa and India.

The two lawmakers, who have been compiling evidence in a separate Congressional investigation, said the internal company e-mails released Thursday contradict Wal-Mart’s public statements about the bribery allegations in Mexico.

Their letter came in response to specific bribery allegations made in a New York Times expose in December charging that Wal-Mart paid hundreds of thousands of dollars in bribes to Mexican officials to build a store in Teotihuacan at the site of ancient ruins as part of a broader effort to expand its retail presence in the country. In their letter, the lawmakers cited a quote in the article from a Wal-Mart spokesman saying U.S. executives knew there was a controversy in Teotihuacan but “did not know about the corruption allegations.”

“Documents obtained by our staffs from a confidential source indicate that you and other senior Wal-Mart officials were personally informed about these bribery allegations on multiple occasions,” the lawmakers said in the letter. They said the documents and e-mails “call into question” Wal-Mart’s public statements that no associates, including those in charge of real estate projects in Mexico, recall bribery allegations related to the store.

“It would be a serious matter if the ceo of one of our nation’s largest companies failed to address allegations of a bribery scheme,” they warned Duke.

The Wal-Mart e-mails released Thursday, some of which showed Duke listed as a recipient, provided details about bribery allegations made by Sergio Cicero Zapata, the former in-house counsel for Wal-Mart de Mexico who was in charge of obtaining building permits in the country, relating to permits for the Teotihuacan store.

While not directly addressing the specific claim by the lawmakers that Duke knew about the bribery allegations related to the Teotihuacan store in 2005, a Wal-Mart spokeswoman instead denied their contention that Wal-Mart’s public statements on the bribery allegations were “contradictory.”

“The letter from Congressmen Waxman and Cummings leaves the wrong impression that our public statements are contradicted by the information they released today,” she said. “The fact is, the chronology of events relied upon in their letter is inaccurate. The company statement referenced in their letter that appeared in the December 2012 New York Times story focused on events in 2004. The e-mails attached to the [lawmakers’] letter were sent almost a year later.”

She also said there is “no new information” provided in the letter to Duke.

“This information has been part of the company’s ongoing investigation of potential violations of the U.S. Foreign Corrupt Practices Act for more than a year and has been the subject of two New York Times articles,” she said. “We have provided extensive documentation to the Department of Justice and the Securities and Exchange Commission, including the documents released today, as part of our ongoing cooperation with the appropriate law enforcement agencies in this matter. We are committed to having a strong and effective global anticorruption program everywhere we operate and taking appropriate action for any instance of noncompliance.”

Duke recently responded to the broader bribery allegations at a Council on Foreign Relations event in New York in December.

“We take those allegations very, very seriously and we have an investigation ongoing,” Duke said. “We’ll take the appropriate action based upon the conclusion of this investigation.…Doing the right thing, we’ve installed a number of additional steps in this particular area of [FCPA] compliance.…We’ve taken a look at just how we operate and put in place compliance operations, and we’ve established a new office of compliance.…And I think this focus will make us a better company regardless of the outcome of the investigation in Mexico.”

Jonathan Fee, a partner with Alston & Bird LLC who specializes in international trade law, said it is premature to draw conclusions from the new documents released by Waxman and Cummings.

“I’m not sure random e-mails that could be taken out of context necessarily rise to the level of proof of intentional violations of the [FCPA] act until the whole matter has been heard and resolved,” Fee said. “I don’t think it’s fair to the ceo to make those kinds of conclusions before an investigation has run its course.…These investigations literally involve millions of documents of communications. To pick up one or two of them, either to prove or disprove wrongdoing, is premature.”

The congressmen are requesting that Duke explain his knowledge of the Teotihuacan bribery allegations by Jan. 24 and to allow Maritza Munich, former general counsel of Wal-Mart International, to meet with Congressional investigators without placing limits on what she can say.