21 June 2019
Walmart, America’s biggest store chain, agreed Thursday to pay $282 million to settle federal allegations of overseas corruption. The settlement covers civil charges of Securities and Exchange Commission and a criminal case built by federal prosecutors in Virginia. Settlement for the criminal case amounted to $138 million and $144 million for the civil case.
In the criminal case Walmart’s Brazilian subsidiary, WMT Brasilia, pleaded guilty to violating the Foreign Corrupt Practices Act.
Investigations that started in 2012 and have cost the company more than $900 million. The company said that they have taken appropriate remedial action and now have a robust Global Anti-Corruption Compliance Program.
SEC said that the company repeatedly failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls. The charges cover the company’s operations in Brazil, China, India and Mexico.
In Mexico, the SEC uncovered evidence that the company had made donations, to municipalities and local governments, in the form of cheques, cash, and merchandise such as cars and computers.
In India, the SEC said, Walmart had recorded improper payments to officials to obtain operating permits using vague descriptions such as “miscellaneous”, “incidental” and “professional fees”.
In Brazil in 2009 and 2010 payments were made to an intermediary to expedite construction contracts. Inside Walmart Brazil the intermediary was known as “sorceress” or “genie” for her “ability to acquire permits quickly. This intermediary was actually a government official.
In China the company paid about $60,000 to a store landlord for “government relationship consulting services”, as well as permit costs.
The New York Times won a Pulitzer Prize in 2012 for reporting bribes of millions of dollars made by Walmart executives to facilitate growth in Mexico.
Last year the company decided to sell 80% of its stake in Walmart Brazil to Advent International at a loss of $4.5 billion. At the time, the subsidiary had 438 stores in Brazil.