Wal-Mart and foreign bribery

The New York Times recently alleged that Wal-Mart deliberately hid investigations into bribery practices at the company’s largest foreign subsidiary, Wal-Mart de Mexico and paid bribes totalling US$24 million. Wal-Mart is Mexico’s largest private sector employer with currently 209,000 employees. Investigations into the allegations are underway in both Mexico and the United States.

In an article for the Huffington Post, Transparency International’s Managing Director Cobus de Swardt used the allegations in the Wal-Mart case to show how important it is for corporate leaders to insist on a culture of integrity throughout their organisations, no matter how big they are or how difficult the environment is in which they work.

On our TI blog, Susan Côté-Freeman, Programme Manager in Transparency International's Research & Knowledge Department discusses the need for companies to strengthen their anti-corruptions programmes and Natalie Baharav highlights the impact of the allegations in Mexico and the reaction of Transparencia Mexicana, our national chapter.

Practicing what you preach: A lesson for Walmart's bosses

by Cobus de Swardt, Managing Director Transparency International

Allegations that Walmart paid millions of dollars in bribes to build up its empire in Mexico should act as a warning sign to corporations everywhere. A culture of bribery in a subsidiary is unacceptable, but failing to deal with it would be even worse.

While it matters a great deal if a company has a strong code of conduct and anti-corruption program -- and in this regard Walmart does better than most public companies -- it is equally important how vigorously and effectively these are implemented.

A company's way of doing business is set at the top. Leaders have both the obligation and means to build a culture of integrity in their organization. Like any other aspect of human resources, there have to be incentives for carrying out the code of conduct, and sanctions for ignoring it. And when challenged to act, it's the actions that senior management take that count the most. With that in mind, senior managers must lead by example. Read more on Huffingtonpost.com

After Wal-Mart: What best practices can limit foreign bribery?

by Susan Côté-Freeman, Programme Manager in Transparency International's Research & Knowledge Department

In the wake of Wal-Mart’s alleged Mexican bribery scandal, many voices in the business sector are no doubt asking what companies can do to improve their anti-corruption programmes and avoid the increasingly long arm of US law-enforcers who are vigorously pursuing violations of the Foreign Corrupt Practices Act.

This is just the latest corporate corruption scandal, and they continue to surface almost on a daily basis. Ultimately, these scandals undermine the credibility of company commitments to act as good corporate citizens.

There is no denying that we are making some strides in setting up a more effective legal framework aimed at combating corruption. And responsible enterprises are getting better at developing comprehensive policies and procedures to address the risk of corruption.

But beyond this, companies also have a responsibility to be transparent about their commitments to corporate responsibility, in particular their efforts aimed at curbing corruption. Read more on Space for Transparency

A bribery scheme to win market dominance in Mexico?

by Natalie Baharav, Communications Officer at Transparency International

Over the weekend, the New York Times alleged that Wal-Mart deliberately hid investigations into bribery practices at the company’s largest foreign subsidiary, Wal-Mart de Mexico. Wal-Mart is Mexico’s largest private sector employer with currently 209,000 employees. Allegedly there is a paper trail that includes hundreds of suspect payments worth more 24 million USD in total.

The allegations go back to 2005, when a former Wal-Mart de Mexico executive described in an email to one of Wal-Mart’s senior lawyers how the company operated a bribery scheme in order to secure construction permits in virtually every corner of the country. Still, according to the New York Times story, the executives at Wal-Mart headquarters were more interested in damage control than amending the situation in ethical and legal terms. Supposedly, the story said, Wal-Mart shut down its internal investigation despite a report stating that both Mexican and U.S. laws were likely violated, in order to accelerate the company’s rapid expansion in the country.

Eduardo Bohorquez, Executive Director of Transparencia Mexicana, Transparency International’s National Chapter in Mexico, calls for the Mexican government to probe Wal-Mart as international conventions obligate the country’s government to get involved although only local officials have been mentioned in the allegations. Read more on Space for Transparency