Mexico scandal hurting Walmart at the local level
Posted on May 10, 2012 by jway
This post was written by Ben Waxman.
The top corporate leadership of Walmart has been under fire lately, thanks to a New York Times story that alleged widespread bribery by the company in Mexico and a cover up by top executives. The company is now under investigation by the U.S. Justice Department for violation of the Corrupt Foreign Practices Act, which could result in billions of dollars in fines. The scandal has contributed to the perception that there is a culture of lawless at the very top of the company.
If true, the allegations against Walmart’s top leadership show that the company has serious problems at the very top. It’s very difficult to trust the elite management. That’s why Walmart associates have called for both CEO Mike Duke and Walmart Board Chairman Rob Walton to resign.
Concern is growing about Walmart’s reported misdeeds, especially at the local level. Could bribery similar to what allegedly happened in Mexico be happening here? That’s a question that some are asking in locations where Walmart is looking to build additional stores. For example, a member of a local Council in Silicon Valley recently delayed a vote on allowing Walmart to build a new grocery store until more information on the Mexican bribery scandal was available.
Council member Matt Sullivan, who requested a special hearing Monday to appeal the Planning Commission’s March approval of the plan, continued the hearing after nearly three hours. He asked for more time to research accusations that Walmart de Mexico was involved in bribery to gain market share in Mexico.
“Information has come to light that Walmart possibly violated the Foreign Corrupt Practices Act,” Sullivan said. “We need to know the potential impacts this could have under the circumstances.”
Walmart is seeking approval to open a Neighborhood Market grocery in the former Nob Hill location on Santa Rita Road.
In addition to his tough questions for Walmart, Sullivan wants to pass an ordinance that would limit the amount of business that the city could do with a corporation that has been found guilty of committing a crime. That would mean Walmart would be barred from doing business with the city if it was convicted on charges connected to Corrupt Foreign Practices Act.
One thing is clear: Walmart’s problems in Mexico and the United States seem to come from the same issue. The company is obsessed with growth at any cost. As a result, Walmart makes all kinds of promises that often turn out to be untrue. It also makes all kinds of political and charitable donations to gain influence. Obviously, this strategy can backfire.
How much more trouble will the Mexican bribery scandal cause for Walmart at the local level? Stay tuned.