Posted by: Cgonsalves
bribery, compliance, FCPA, GRC, Mexico, Wal-Mart
As you probably know by now, Wal-Mart is embroiled in a scandal involving tens of millions of dollars in bribes paid to Mexican officials for zoning and building permits to perpetuate the company’s white-hot expansion throughout our neighbor to the south. Today, one in five Wal-Mart stores is in Mexico, according to the New York Times.
The as-yet-unnamed GCO will no doubt begin his or her tenure trying to explain to federal investigators how it is that Wal-Mart’s Mexican subsidiary knew of the bribes since 2004, but worked to cover them up until the activity was uncovered by the Times. By some accounts, the company has spent more than $24 million to grease the palms of local solons, which would be a gross violation of the U.S. Foreign Corrupt Practices Act (FCPA).
“Wal-Mart’s latest move — appointing a global compliance officer — is all well and good, but is like shutting the barn door after the horse ran out,” said Anthony Michael Sabino, a professor at St. John’s University’s Peter J. Tobin College of Business. “Notwithstanding how well behaved Wal-Mart may be going forward, they must still explain the alleged violations of the FCPA that have already occurred.
“This will be an interesting application of a four decades old law that prohibits American corporations from engaging in the bribery of foreign persons,” said Sabino. “To be sure, paying a ‘gratuity’ may be customary in some parts of the world, but the U.S. has outlawed such practices since the Watergate era. And since that time, U.S. businesses have been hard pressed to obey American law yet get business done in places where a little ‘grease’ is absolutely necessary and expected as a routine cost of doing business.”
According to the Associated Press, Wal-Mart’s new GCO will oversee compliance directors in five other markets. The world’s largest retailer has also established a new, dedicated FCPA compliance director in Mexico who will report to the new GCO.
“Walmart has been working diligently on FCPA compliance and has a rigorous process in place to quickly and aggressively manage issues like this when they arise,” said Wal-Mart spokesman David Tovar in a statement. “In the last year, we have taken a number of specific, concrete actions to investigate this matter and strengthen our global FCPA compliance processes and procedures around the world.
“We will not tolerate noncompliance with FCPA anywhere or at any level of the company,” Tovar said. “We are confident we are conducting a comprehensive investigation and if violations of our policies occurred, we will take appropriate action.”
All that said, I know our job here at SearchCompliance.com is to focus on the technologies that foster and enable good governance, risk management and compliance efforts in the enterprise, but this case is so egregious it bears mentioning on its face. And I honestly can’t think of a technology angle here. What GRC platform could have possibly rooted out the bad actors in Wal-Mart de Mexico over the last seven years? With the obfuscation documented by the Times happening at many levels in the company, I’m not sure the best armed CCO with the latest governance and compliance tools could have ever rooted it out…even if they wanted to.
Perhaps a Clippy-like office assistant? “You appear to be about to bribe a foreign planning board member. Would you like help with that?”
Got a better answer as to how enterprises can use technology to steer clear of FCPA violations in their global dealings? Let me know at firstname.lastname@example.org