WASHINGTON — The Congressional probe into the alleged bribery scandal involving Wal-Mart Stores Inc.’s subsidiary in Mexico widened on Wednesday.
This story first appeared in the April 26, 2012 issue of WWD. Subscribe Today.
The two lawmakers heading the investigation requested information from the U.S. Chamber of Commerce and the Retail Industry Leaders Association, both of which have or have had Wal-Mart executives on their boards. The Congressmen expressed concerns over a lobbying campaign allegedly aided by those groups and the retailer that sought to amend the Foreign Corrupt Practices Act, a law that makes it illegal to bribe foreign government officials.
Reps. Elijah E. Cummings (D., Md.), ranking member of the House Oversight & Government Reform Committee, and Henry Waxman (D., Calif.), ranking member of the House Energy & Commerce Committee, sent letters to Gregg Steinhafel, chairman of RILA and chairman, chief executive officer and president of Target Corp., and Thomas Donohue, president and ceo of the Chamber of Commerce, seeking more information.
“We are concerned about the role that Wal-Mart officials may have played in the efforts to modify the FCPA,” the two lawmakers said in the letter to Steinhafel. “It would appear to be a conflict of interest for Wal-Mart officials to advise on ways to weaken the FCPA at a time when the leadership of the company was apparently aware of corporate conduct that may have violated the law.”
David Tovar, vice president of corporate communications at Wal-Mart, said, “Wal-Mart has never lobbied on the FCPA. Simply because Wal-Mart is a member of an organization does not mean we agree with every position they take.”
A New York Times exposé over the weekend claimed that Wal-Mart bribed officials in Mexico to obtain building permits and that executives sought later to cover up the evidence.
Already, the bribery scandal has taken a bite out of Wal-Mart’s stock, which fell 0.7 percent to $57.36 Wednesday — making for a three-day decline of 8.2 percent that cut the retailer’s market capitalization by $17.33 billion. And complicating matters further, Mexican authorities have also begun to look into the allegations of bribery, according to published reports.
The two U.S. lawmakers cited new allegations that arose in a Washington Post report Wednesday claiming that Wal-Mart “has participated in an aggressive and high-priced lobbying campaign to amend the long-standing U.S. antibribery law that the company may have violated.” According to the story, this campaign was backed by several companies and trade groups, including RILA and the U.S. Chamber of Commerce’s Institute for Legal Reform.
Bill Simon, president and ceo of Wal-Mart U.S., currently serves on RILA’s board, a RILA spokesman confirmed. He was preceded by Eduardo Castro-Wright, who served on RILA’s board from June 2008 through January 2011, when he was also head of the namesake U.S. division, the RILA spokesman said.
Wal-Mart’s expansion in Mexico and alleged bribery was said to have happened when the Mexican unit was led by Castro-Wright.
The lawmakers asked RILA and the Chamber for a list of all members, senior officials and staff who have worked on issues related to the FCPA and have been or are currently affiliated with Wal-Mart or any of its subsidiaries or affiliates over the past 10 years, all internal and external communications involving those individuals relating to the FCPA, all communications about the FCPA and any other antibribery laws between individuals affiliated with their officials and Wal-Mart officials and employees, and all documents relating to actions of Wal-Mart in lobbying for changes to the FCPA or any other U.S. antibribery laws.
“We have received the request and we will respond to it in a timely fashion,” the RILA spokesman said. “RILA regularly communicates with policy makers on dozens of issues affecting our members, their employees, and their customers. In November 2011, the U.S. Department of Justice announced its intent to provide guidance on how it interprets the U.S. Foreign Corrupt Practices Act. At that announcement, Assistant Attorney General Lanny A. Breuer said that he has ‘come to appreciate very much the continuing dialogue [his] team and [he had] been having with the private sector.’ RILA has constructively participated in this ongoing dialogue and has joined others who have identified for the Department of Justice several elements of the law where clarification would be helpful. RILA believes that adherence to the law is essential and that further clarity and predictability regarding FCPA enforcement will help to ensure such compliance.”
In their letter to Donohue, the two lawmakers, citing the Washington Post report, noted that Thomas Hyde, a former Wal-Mart executive vice president and corporate secretary, was one of two high-level officials who were on the board of the Chamber of Commerce’s Institute for Legal Reform, which has “been pushing for the [FCPA] to be scaled back” and “has been criticizing the law.”
A spokesman for the Chamber’s Institute for Legal Reform said it has not yet received the letter but plans to respond when it does.
“Our bipartisan efforts to clarify and strengthen the Foreign Corrupt Practices Act have been long-standing and are on behalf of the entire business community,” he said. “While the law serves an important purpose, its ambiguities and current enforcement practices make it more difficult for American businesses to compete in an increasingly global marketplace.”