Walmart’s $282 million payout is to settle federal charges of ‘overseas corruption’. These charges were made under the Foreign Corrupt Practices Act. The legislation is designed to prohibit U.S. companies with overseas interests from using bribery and other illegal methods to obtain goods or services.
The case against Walmart was brought by the Securities and Exchange Commission and it was due to go to court in Virginia, before the settlement was reached. The settlement is the second agreed by Walmart, against issues stretching back to 2012 and which have collectively cost the company more than $900 million.
Included among the charges is funneling more than $500,000 to an intermediary in Brazil (code named the “sorceress”), where the money apparently helped to make construction permit problems disappear. Similar issues appear to have occurred in Mexico, India, and China where a combination of weak internal controls plus senior employees turning a blind eye, led to employees further down the pecking order thinking it was not a problem to offer financial inducements.
According to U.S. Department of Justice assistant attorney general Brian Benczkowski: “Walmart profited from rapid international expansion but in doing so chose not to take necessary steps to avoid corruption.”
He adds: “In numerous instances, senior Walmart employees knew of failures of its anti-corruption related internal controls involving foreign subsidiaries, and yet Walmart failed for years to implement sufficient controls comporting to U.S. criminal laws.”
Quoted by The Washington Post, Walmart President and CEO Doug McMillon responds: “We’re pleased to resolve this matter. Walmart is committed to doing business the right way, and that means acting ethically everywhere we operate. We’ve enhanced our policies, procedures and systems and invested tremendous resources globally into ethics and compliance, and now have a strong Global Anti-Corruption Compliance Program.”
