Walmart Critics Pounce on Bribery Scandal

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WATCH Walmart Hit With Bribery Allegations in Mexico

Wal-Mart's critics say they are not surprised by charges that the giant retailer paid bribes in Mexico to get its way. Some hope the Mexico scandal--which could wind up costing Wal-Mart billions in fines--will cause investigators to re-examination situations in the U.S. where payments or donations by Wal-Mart or its confederates preceded the company's getting permission to expand.

The New York Times reported that Wal-Mart's internal documents show that the company's Mexican subsidiary paid at least $24 million in bribes to Mexican officials to get permits needed for the company's rapid expansion there. The Times also claims Wal-Mart squelched its own internal investigation of the bribes.

Wal-Mart is the biggest private employer in Mexico. In size, its operations there are second only to its operations in the U.S. One out of every five Wal-Mart stores worldwide is in Mexico.

The company's stock has fallen nearly 5 percent since the scandal broke. The Department of Justice has reportedly launched a probe into the allegations.

What Bernard Sosnick, a stock analyst at Gilford Securities, calls the company's "new imbroglio" only confirms what many labor leaders and long-time critics say they have suspected all along: that Wal-Mart's rapacity knows no ethical restraint. Wal-Mart's many critics are lining up to pile on to the company's woes.

"Am I surprised? Of course not," says Al Norman, author of The Case Against Wal-Mart and of the forthcoming Occupy Wal-Mart. He has been dubbed "the guru of the anti-Wal-Mart movement."

"The only thing that surprises me," he says, "is that here you get to see their fingerprints. Usually, when money changes hands, you can't find the moment when it happened."

The company, he contends, has a long history of paying money to remove obstacles to its expansion. He has compiled examples of what he deems Wal-Mart-related bribery on his website, Sprawl-Busters.com. The claims include situations where citizens testifying at public hearings have accepted cash in exchange for making pro-Wal-Mart statements. In other cases, he claims, groups protesting Wal-Mart expansion have ceased to protest after accepting donations from the company or its partners.

Norman points, for example, to a 2004 episode in Tallahassee, Fla., where a group opposing Wal-Mart's construction of a store said that a real estate broker representing the project offered them a six-figure contribution if they would support it. The group declined the offer and reported it to county commissioners as having been a bribe. Under Florida law, a bribe, to be illegal, must include criminal intent.

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."