Sat, Jun 22, 2019 - Page 10 News List

Walmart to pay settlement after probe

CORRUPTION:A US Justice Department official said top employees failed to report failures of its anti-corruption controls involving foreign subsidiaries to US authorities


Walmart Inc on Thursday said it would pay US$282 million to settle a seven-year-long investigation into whether its overseas units in Mexico, Brazil, China and India breached the US Foreign Corrupt Practices Act.

The retailer is to pay more than US$144 million to settle charges by the US Securities and Exchange Commission (SEC) and about US$138 million to resolve parallel criminal charges by the US Department of Justice, court and regulatory filings showed.

In a separate regulatory filing, Walmart said that the US$282 million was part of a “global settlement” and ended all act-related investigations into the retailer and its overseas businesses.

The Justice Department launched an investigation of the retailer after a series of New York Times articles in 2012 described alleged bribes paid by Walmart in Mexico to obtain permits to build stores there.

The reports spurred a wide-reaching investigation by the department into the behavior of Walmart subsidiaries around the globe, including in Mexico, Brazil, China and India.

“Walmart profited from rapid international expansion, but in doing so chose not to take necessary steps to avoid corruption,” Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division said on Thursday.

“In numerous instances, senior Walmart employees knew of failures of its anticorruption-related internal controls involving foreign subsidiaries and yet Walmart failed for years to implement sufficient controls comporting with US criminal laws,” Benczkowski said.

The Justice Department said that the failures led Walmart’s subsidiaries in Mexico, India, Brazil and China to hire third-party intermediaries and allowed these intermediaries to make improper payments to government officials to obtain store permits and licenses.

Walmart did not voluntarily disclose the conduct in Mexico and only disclosed the conduct in Brazil, China and India after the US government had already begun investigating the situation in Mexico, the department said.

Charles Cain, head of the SEC Enforcement Division’s Foreign Corrupt Practices Unit, said: “Walmart valued international growth and cost-cutting over compliance.”

The retailer’s chief executive officer said that Walmart had enhanced its “policies, procedures and systems and invested tremendous resources globally into ethics and compliance.”

Walmart also said it had spent more than US$900 million on related matters, including inquiries, investigations and its global compliance program, in the past seven years.

As part of the settlement, Walmart Brazil has entered a guilty plea in the US District Court for the Eastern District of Virginia, the retailer said.

According to court filings, from about 2009 to 2010, Walmart Brazil knowingly led its parent to maintain false records, which then made it into the company’s consolidated financial statements.

Walmart Brazil and its employees recorded US$527,000 in payments to an intermediary for assistance in acquiring construction permits, as a payment to certain construction companies, the court filings show.

The intermediary’s ability to obtain licenses and permits quickly “by sorting things out like magic” earned the intermediary the nickname “sorceress” or “genie” within Walmart Brazil, the court filings said.

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