NEW YORK — Allegations that Walmart covered up the findings of an internal probe that proved its Mexican subsidiary bribed officials in that country could have huge implications for the world’s biggest retailer and its executives.
The alleged bribery scheme was revealed by The New York Times, which reported that Walmart failed to notify law enforcement after the company’s investigators found evidence of millions of dollars in bribes given to Mexican officials in exchange for getting building permits faster and other favors to help it aggressively expand in the region.
If Walmart violated the Foreign Corrupt Practices Act, which forbids paying bribes to foreign officials, the company could face fines of hundreds of millions of dollars.
Top Walmart executives could lose their jobs — or worse, go to jail. And the retailer could suffer a public relations nightmare if a lengthy investigation ensues.
“Unlike prior bad PR stories in recent years, this will be a material distraction for Walmart on multiple fronts,” said Charles Grom, a retail analyst at Deutsche Bank.
The Times reported on Saturday that a former company executive told Walmart top brass in 2005 details of a bribery campaign that was used to help the retailer expand in Mexico. The paper said Walmart officials launched an investigation into its Walmart de Mexico subsidiary, but shut it down despite a report by its lead investigator that Mexican and U.S. laws likely were violated.
Over the weekend, Walmart said it had disclosed the findings of its investigation to the U.S. Department of Justice and the Securities and Exchange Commission in December, and that it met with officials from both agencies to discuss the company’s ongoing investigation. But, according to the Times, Walmart only did so after being informed that the paper was looking into the allegations.