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April 23, 2012
A case which could damage a huge company’s rep: New allegations of a massive bribery and cover-up, orchestrated by Wal-Mart International to protect Wal-Mart de Mexico executives, surfaced in the New York Times over the weekend. Former executive Sergio Cicero Zapata spent more than 15 hours with Times reporters, detailing his role, and the role of others in the alleged crimes. Worst of all, according to Cicero, former CEO Eduardo Castro-Wright didn’t just know about the payments; he endorsed them. Here’s what happened after that:
- Sergio Leaves Wal-Mart De Mexico After being passed over for a promotion, Sergio left the company in 2004. In September 2005, he contacted senior Wal-Mart lawyer Maritza Munich to discuss his knowledge of crimes he claimed were authorized by senior-level management.
- Frantic investigations begin Munich hires Juan Francisco Torres-Landa to debrief Cicero, who reports that the allegations seem genuine. Munich notifies Wal-Mart International, and recommends a full investigation of Wal-Mart de Mexico’s senior management team. source
"There is reasonable suspicion" of violated laws
- reaction Wal-Mart then hired the law firm Willkie Farr & Gallagher to conduct an internal probe, but the company ignored their recommendation of a full investigation — instead choosing to let corporate investigations director Joseph Lewis take over.
- results Unhappy with Lewis’ “law enforcement approach” to the case, management re-wrote investigation procedures. Supervision of the matter was given to top executives (then under investigation) who closed the case, citing a lack of evidence.
- fallout After years of cover-ups, Wal-Mart International now finds itself in the midst of a huge PR scandal. The company has obtained new legal counsel, but has not announced plans to release any executives named. source
The company’s feeling it from investors
- 5% decline in the company’s stock on Monday, after the report source
» So what’s next? As of this posting, neither the U.S. Department of Justice or its Mexican counterpart have announced that they’ll be launching investigations of Wal-Mart. If either country does decide to pursue an investigation, analysts and Foreign Corrupt Practices Act experts estimate that the governments’ legal fees could end up much higher than Wal-Mart stands to lose in penalties. We’ll keep you posted as more information becomes available. (Photo by Code Poet)
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20:55 // 1 year ago