Walmart’s Bad News Week Continues as Bribery Scandal Fall-out Grows
Posted on June 13, 2012 by jway
Walmart suffered another series of public relations blows this week on the heels of the reported bribery and cover-up scandal, as lawmakers say the company is not fully cooperating with an ongoing probe and Walmart expanded an internal review of its anti-corruption policies to three countries.
Representatives Elijah Cummings (D-MD) and Henry Waxman (D-CA) told Walmart CEO Mike Duke in a letter that the company hasn’t provided the information the congressmen requested. “Walmart’s actions to date significantly inhibit our ability to investigate these allegations,” the letter states. Cummings and Waxman also say that Walmart has only made outside attorneys, not executives or in-house staff, available for questions.
This is a troubling development for Walmart, as it expanded its internal review of the company’s anti-corruption policies to include operations in China and Brazil. The investigation may not stop there; company lawyers have recommended that Walmart’s business practices also be evaluated in India and South Africa, where Walmart is already facing challenges over its potential impact to local suppliers.
As the breadth of these investigations grows, so does discontent among Walmart’s shareholders. A group of New York City pension funds, which own 5.6 million shares of Walmart Stores, Inc., filed a suit against the company’s executives on Monday with the aim of “rooting out the directors and executives responsible for the current crisis.”
The lawsuit named 27 current and former Walmart executives and all but one member of its current board, including CEO Mike Duke, former CEO Lee Scott, Jim Walton and Board Chair Rob Walton.
This is just the latest of at least a dozen suits filed against the company since the New York Times reported that Walmart de Mexico paid millions in bribes to expedite store openings, after which Walmart’s U.S. executives allegedly covered up the bribes.
The most significant rebuke of Walmart’s corporate governance (or lack thereof) came earlier this month, however, when the Board of Directors received an unprecedentedly high rate of disapproval at the Annual Shareholders Meeting.
This post was written by Kurt Scott.