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Black
Professor Pidgeon
Christina R. Black
Professor Pidgeon
In October 2005, when the allegations were brought to light, a Harvardtrained lawyer, Juan Torres-Landa, was brought in to debrief Zapata. TorresLandas report stated that Wal-Mart perfected the art of bribery and covered
it up with fraudulent accounting. It was also uncovered that Wal-Mart de
Mexicos top executives knew about the bribery payments and took steps to
conceal them; they also failed to notify any law enforcement, then shut down
their initial investigation. From an initial report done by Wal-Marts lead
investigator, who was an ex FBI agent stated, There is reasonable suspicion
to believe that Mexican and USA laws have been violated. (Barstow, 2012)
The report was sent to senior management, including, Thomas mars, general
counsel; Thomas Hyde, executive vice president and corporate secretary;
Michael Fung, top internal auditor; and Craig Herkert, chief executive for
operations in Latin America; Lee Stucky, chief administrative officer of WalMart international. It was recommended that the company undergo a harsh
investigation. However, it was rejected by the leaders, and they said they
were going to do an in house investigation, which then gave the executives
complete and direct control over the investigation. Focusing on damage
control and not so much correcting the wrong doing, the files and reports
from the internal investigator were shipped to Mexico City, giving Wal-Mart
de Mexico primary responsibility. Again, another attempt to conceal the
fraud. It was then that the executives were exonerated by the general
counsel.
Christina R. Black
Professor Pidgeon
After The New York Time let Wal-Mart know about their article, Wal-Mart
acknowledged there is reason to believe that they violated the Foreign
Corrupt Practices Act, which is a federal law that governs American
corporations and their subsidiaries to bribe foreign officials. Since then, it
had been found that bribe payments had been made to a Mexico governor. It
was because of that the investigation spread to other countries. (Feely,
2014) In its many attempts to defend itself to avoid any negative media
attention and scrutiny from the Federal Government, Wal-Mart is using
aggressive and corrupt methods to bypass what has been prohibited, and
while doing this they have yet to suffer any ramifications. It used bribery as a
means to monopolize, neglecting the regulatory safeguards that are set to
protect a town and its inhabitants from unsafe commercial development. And
where are the key players today? Eduardo Castro-Wright was able to retire in
July 2012. Jose Rodriguez Macedo is now the man in charge. With that said, it
is apparent that the impact that Wal-Mart and its affiliates have suffered is
uncertain. However, what is known the company has suffered investor
lawsuits, investigations by the Department of Justice and Securities
Exchange Commission, and brand damage. If Wal-Mart is found guilty of
violating the FCPA, they could be responsible for paying approximately $4.5
billion dollars in penalties. (Brown, 2012) In the most recent article, after
years of the back and forth and numerous investigations, a federal judge
according to an article posted by Bloombergbusinessweek.com on October
Christina R. Black
Professor Pidgeon
1st, 2014, an investigation is still being undergone and the request for the
allegations to be thrown out have been denied. (Feely, 2014)
A good place to start for preventative and detective measures would be for
the company to implement an effective corporate governance, which refers
to the instruments, processes and relations by which corporations are
controlled and directed, controls. Starting with the top, it is important for the
CEO to lead from the top to the bottom, establishing effective systems to
help in the prevention, detection, and responding to all reported wrong
doing. Lee Scott, who at the time was the CEO, lacked any crisis
management. Instead, he left those who could provide professional expertise
out, he did not report to the board or law enforcement, and instead he
suppressed the issue and covered it. Secondly, when the initial report was
sent to the United States, it should have been reported to the proper
authorities then. Instead, it was sent back to Mexico, where the general
counsel was able to fabricate a false report that was paid no attention to
after it was released. General Counsel in both regions swept the problem
under the rug. Lastly, the need for a whistleblowing program is mandatory.
Working in an environment where silence is a virtue is ineffective. The lack of
a hotline or whistleblowing program lead the scheme on for years because
the allegations were never reported to an independent source. The
allegations went from a whistleblower, to the United States global leadership,
and back to Mexico. Once the United States learned some of the details
involving the allegations, they covered and hid it from the board of directors.
Christina R. Black
Professor Pidgeon
References
Barstow, D. (2012, April 22). Vase Mexico Briber Case Hushed Up by Wal-Mart After
Top-Level Struggle. The New York Times, 1-17. Retrieved from
http://www.pulitzer.org/files/2013/investigative-reporting/01walmart04-22.pdf
Brown, A. (2012, April 23). Mexican Bribery Scandal Could Cost Wal-Mart $4.5
Billion; Shares Down 4.7%. Retrieved from www.forbes.com:
http://www.forbes.com/sites/abrambrown/2012/04/23/spooked-investors-sinkwal-mart-nearly-5-after-bribery-revelations-at-least-4-5b-penalty-likely/
Feely, J. (2014, October 14). U.S. Judge Says Wal-Mart Must Face Mexican-Bribe
Claims. Retrieved from www.businessweek.com:
http://www.businessweek.com/news/2014-09-30/wal-mart-judge-finds-retailermust-face-mexican-bribe-claims
Hartung, A. (2012, April 26). Wal-Mart's Mexican Bribery Scandal Will Sink it Like an
Iceberg Sank the Titanic. Retrieved from www.forbes.com:
http://www.forbes.com/sites/adamhartung/2012/04/26/walmarts-mexicanbribery-scandal-will-sink-it-like-the-icerberg-sank-the-titanic/