Walmart Critics Pounce on Bribery Scandal


Joseph Hansen, international president of the United Food and Commercial Workers International Union (UFCW), says only two things surprise him about the Mexican revelations: First, the scope of the alleged bribery. Second, "I thought they were smarter than that." The UFCW has for years waged an effort to organize Wal-Mart's workers.

Hansen says that when he first learned of the allegations, "They raised question in my mind about stores approved in the U.S., where zoning laws changed quickly and permits were issued quickly. I think we'll now see people go back and ask questions about that."

The union, he says, has never accused the company of having paid bribes. "But they have built stores where there was local opposition. How it all gets done, in the dead of night, well, it's suspicious. We want to go back and look at how some of these approvals were made." Already members of Congress have asked for such an investigation.

"The reported cover-up by Wal-Mart executives at the highest levels exposes a core truth: Wal-Mart cannot be taken at its word. A Department of Justice investigation into foreign bribery is an urgently needed first step. Congress should immediately convene hearings to examine whether Wal-Mart is using these unethical business practices in their U.S. operations," the union said in a statement.

The company, says Hansen, "has a lot of answer for, not only in Mexico."

Just how much will depend on the how aggressive the U.S. government, the Mexican government and even, potentially, the British government show themselves to be in imposing penalties and fines, should Wal-Mart be found guilty of having paid bribes.

Wal-Mart's response has been limited so far to a formal statement, updated today, saying that the company takes its compliance with the U.S. Foreign Corrupt Practices Act (FCPA) "very seriously," and that it is "committed to having a strong and effective global anti-corruption program in every country in which we operate." The FCPA prohibits bribes to win business overseas.

The company statement goes on to say that the Times' allegations, even if proved true, are "not a reflection of who we are or what we stand for." Contacted by ABC News for further comment, a Wal-Mart spokesman declined.

Professor Ernesto Dal Bo, who teaches a class in business ethics at the Haas School of Business at U.C. Berkeley, says that Wal-Mart, if found guilty of paying bribes, could face substantial penalties under the FCPA and Britain's Bribery Act. The latter can apply, he says, if a foreign-based corporation has as few as one employee working in the U.K.

"If history is to serve as any guide," he says, "in the Siemens case the U.S. settlement ended up being $800 million, or a bit less than 1 percent of the yearly revenue of Siemens." After adding in legal costs and European fines and settlements, he says, Siemens wound up paying about 3.5 billion euros, "which was more like 5 percent of yearly revenue." Translating that to Wal-Mart, "with revenue above $400 billion, we'd be looking at [fines] above the $10 billion mark."

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