Wal-Mart Stores Inc. is at the center of a media firestorm following accusations that the retail giant silenced an internal bribery investigation involving the rapid expansion of its retail footprint in Mexico.
The discount giant denied claims made by The New York Times on Saturday that it covered up evidence that executives at Wal-Mart Mexico paid bribes in 2005 to obtain permits to build stores in the country.
“If these allegations are true, it is not a reflection of who we are or what we stand for,” said Wal-Mart spokesman David Tovar. “We are deeply concerned by these allegations and are working aggressively to determine what happened.”
The recent claims are blemish on what’s been story of robust growth internationally for the retailer, beginning with its business in Mexico. In 1991, Mexico became home to Wal-Mart’s first oversees operations and today counts as one of the retailer’s largest global markets with 2,088 doors and sales of just over 379 billion pesos, or $29 billion, last year. Wal-Mart, which recently surpassed the 10,000-store mark worldwide, raked in $444 billion in sales in 2011.
Although the Bentonville, Ark.-based retailer claimed it doesn’t have a “full explanation of what happened,” the allegations may explain the investigation it launched last fall related to compliance with the U.S. Foreign Corrupt Practices Act.
“We will not tolerate noncompliance with the FCPA anywhere or at any level of the company,” Tovar said, adding that Wal-Mart has met “voluntarily” with the U.S. Department of Justice and Securities and Exchange Commission to self disclose the ongoing investigation on the matter.
In December, the retailer filed a quarterly report with the SEC, informing shareholders that it had launched an investigation on the matter.
A spokesman for the SEC declined to comment on the matter Sunday. Calls to the DOJ for comment were not immediately returned.
According to the New York Times, Sergio Cicero Zapata, a former Wal-Mart executive, sent an e-mail to the retailer’s lawyer that described how its Mexico unit had “orchestrated a campaign of bribery to win market dominance.”
Zapata, who had been responsible for construction permits until 2004, told Maritza Munich, who at the time was Wal-Mart’s International general counsel, that execs bribed government officials to get permits that typically took months to obtain. Those permits “magically” materialized within days, said Zapata, who also provided details implicating Wal-Mart Mexico’s then chief executive officer Eduardo Castro-Wright.
Castro-Wright, who joined Wal-Mart Mexico in 2001 as president and chief operating officer, had been instrumental to the retailer’s expansion in the region. Just two years after joining the company, the ambitious Castro-Wright took the reins as ceo of the business.
But in 2010, the executive, by then president and ceo of Wal-Mart U.S., was transferred to oversee Wal-Mart’s e-commerce business, a move that raised eyebrows at the time, considering Castro-Wright’s meteoric rise and success developing the company’s footprint in Mexico.
Perhaps more startling was Wal-Mart’s announcement in September that the 56-year-old vice chairman and ceo of global e-commerce and sourcing would retire from the company this July.
But the focus of the Times’ allegations centered around how Wal-Mart responded to Zapata’s accusations. According to the newspaper, after Zapata alerted Wal-Mart of the bribery, an internal investigation was launched, and evidence of hundreds of suspect payments adding up to more than $24 million were unearthed in the retailer’s Mexico City headquarters.
The Times said the retailer’s lead investigator believed that there was reasonable suspicion that U.S. and Mexican laws had been violated and that an expanded investigation should be conducted.
Instead, Wal-Mart’s leaders shut down proceedings without alerting government officials, said the newspaper, noting that none of the retailer’s executives were disciplined either.
“We are working hard to understand what occurred in Bentonville more than six years ago and are committed to conducting a complete investigation before forming conclusions,” Tovar said. “Unfortunately, we realize that, at this point, there are some unanswered questions. We wish we could say more but we will not jeopardize the integrity of the investigation.”
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye