Walmart in corruption scandal in Mexico – South Africa next?

No action has been taken against the Walmart directors that were involved in the bribery scandal in Mexico. According to Reuters, an international news agency, Walmart shareholders at the company’s annual meeting earlier this month voted in far larger numbers than in the past against the re-election of Chief Executive Mike Duke and others to the company's board in a rebuke after a Mexican bribery scandal. Still, with a strong majority of votes cast in favor of each director, a boardroom shake-up at the world's largest retailer is unlikely.

The issue was brought to light in an April 21 New York Times report which said that management at Wal-Mart de Mexico, or Walmex, allegedly orchestrated bribes of US$24 million to help it grow quickly in the last decade and that Walmart's top brass tried to cover it up.  After the bribery allegations Walmart sent investigators to Mexico City, the capital of Mexico and they found a paper trail of hundreds of suspect payments. However the company leaders shut down the investigation and neglected to notify US or Mexican law enforcement officials, the New York Times reported.

A former Walmart executive leaked the bribery scandal in an email to a senior Walmart lawyer and described how the retail giant had orchestrated a campaign to win market dominance. In its rush to build stores, he said, the company had paid bribes to obtain permits in virtually every corner of the country. The former executive gave names, dates and bribe amounts.

Bribery of foreign government officials is a breach of the US’ Foreign Corrupt Practices Act (FCPA) and it could result in stiff fines and prison sentences. Walmart is also notorious for union busting and exploitative labour practices. Recently there have been groups that have filed derivative lawsuits against Walmart Stores Inc based on reported allegations of bribery in Mexico and the cover-up by Walmart officials.