Wal-Mart Stores Inc. (WMT), the world’s
largest retailer, said it spent $439 million in the past two
years to investigate the possible payment of foreign bribes,
making it one of the most expensive probes in U.S. history. The company spent $282 million in the fiscal year ended
Jan. 31 and $157 million the previous year, and expenses will
continue to rise, according to an annual report filed March 21.
On Feb. 20, Wal-Mart projected FCPA probe and compliance costs
would be $200 million to $240 million for fiscal 2015. In November 2011, Wal-Mart disclosed possible violations in
Mexico to the U.S. Justice Department and Securities and
Exchange Commission. The New York Times reported in 2012 that
the retailer paid $24 million in alleged bribes in Mexico. The
probe expanded to other countries, including China, India and
Brazil, the retailer said in 2012. The U.S. is investigating possible violations of the
Foreign Corrupt Practices Act, which bans payments by companies
or their agents to foreign governments to obtain or retain
business. Such probes typically end in settlements, with
companies paying fines and admitting wrongdoing. Mexican authorities also are investigating, while Wal-Mart
faces shareholder lawsuits and is examining its global anti-corruption compliance programs.
Photographer: David Rochkind/Bloomberg
In November 2011, Wal-Mart Stores Inc. disclosed possible violations in Mexico to the... Read More
No Estimate
“While we believe that it is probable that we will incur a
loss from these matters, given the ongoing nature and complexity
of the review, inquiries and investigations, we cannot
reasonably estimate any loss or range of loss that may arise
from these matters,” according to the filing. David Tovar, a spokesman for Bentonville, Arkansas-based
Wal-Mart, said it would be “inappropriate” to comment on the
investigation before it is concluded. “We are working aggressively to enhance our global
compliance program and are committed to having a strong and
effective program in every market in which we operate,” Tovar
said today in an e-mail. Wal-Mart’s fourth-quarter net income fell 21 percent to
$4.43 billion, or $1.36 a share, from $5.61 billion, or $1.67, a
year earlier, the company said in its most recent earnings
release. The company forecast profit in the year through January
2015 that trailed analysts’ estimates.
Store Expansions
In addition to the $24 million in alleged bribes, Wal-Mart
made $16 million in “donations” to Mexican local governments
as late as 2005 to speed store expansions, the New York Times
reported in April 2012. The company also failed to examine fully
claims by a company lawyer in 2005 that he funneled bribes to
Mexican officials, the newspaper reported. “It’s relatively safe to assume that this is one of the
highest pre-enforcement-action professional fees and expenses
ever reported,” said Michael Koehler, a law professor at
Southern Illinois University who writes the FCPA Professor blog. In 2008, Siemens AG, Europe’s largest engineering company,
agreed to pay $800 million to the U.S. and $814 million to
German authorities as part of a crackdown on bribery. During the
course of the probe, Siemens spent $1 billion on attorneys and
accountants and its internal controls. “Companies under FCPA scrutiny have to take it seriously
and hire lawyers, auditors and compliance specialists,” Koehler
said. “But when companies are paying more than $1 million per
working day, one can legitimately ask the question: Has this
turned into a boondoggle for everyone involved?” To contact the reporters on this story:
David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net;
Renee Dudley in New York at
rdudley6@bloomberg.net To contact the editors responsible for this story:
Michael Hytha at
mhytha@bloomberg.net
Andrew Dunn, Stephen Farr
LLC 501C- 4 UCC 1-308.ALL RIGHTS RESERVED WITHOUT PREJUDICE
No comments:
Post a Comment