The New York Times has published an article which alleges that Wal Mart top management suppressed action on massive bribery in the expansion of Wal Mart de Mexico. Given corporate America’s relentless law breaking, this story tells a tale- and more.
NOTE- Wal Mart isn’t on trial here. Wal Mart should be given the basic courtesy of reply to the allegations in the NYT story and the rights of due process, not just “on principle”, but in fact. Trial by media would be particularly inappropriate in a case of this seriousness. This story illustrates far more dangerous and much more important issues for the wider corporate sector.
The story runs roughly:
1. Approvals for construction of Wal Mart stores happen super-fast.
2. Corruption in Wal Mart de Mexico alleged.
3. Conditions for approval, including environmental issues, “vanish”. (You don’t say.)
4. Investigators find evidence.
5. Top management does nothing.
6. Investigators removed from Wal Mart Mexico.
7. Auditor fired.
8. Further investigations commenced, but go nowhere.
9. Lack of action.
10. Parties involved in investigation leave Wal Mart.
11. Parties involved in alleged bribery leave Wal Mart.
12. Lack of action- Wal Mart decides not to take action against the person said to be the facilitator of the bribery.
At no point are regulators or law enforcement agencies involved in this situation, which went on for years. There’s no indication from the NYT story that they were even aware of the situation. Nor is/was the FBI involved, despite the fact that this situation involves the Federal Foreign Corrupt Practices Act.
The culture problem
OK, so now we have a picture of a corporate culture that doesn’t solve its own problems and is able to create the mess described by The New York Times for itself. There are some absurdities and some atrocities in this mix:
• Massive misuse of corporate money, for which the corporation could be held responsible, is alleged. (Corporations can be held liable for the actions of people working on their behalf, prima facie. Management can also be held responsible for misuse of funds by shareholders.)
• Equally massive amounts of documentation are produced on the subject, resulting in no effective action.
• Bribery is a criminal offence, both in Mexico and the United States.
• Conflicts of interest in terms of management, or in this case non-management, of the case were ignored despite advice to the contrary.
• The Mexican government was apparently not interacting on any level with Wal Mart regarding the allegations.
• The apparent assumption that all this information regarding the Mexican dealings would be “on the dark side of the moon, i.e., never come to light. (No, Pink Floyd didn’t invent the expression, either.)
Worthy of mention here is that Wal Mart apparently didn’t have a senior management fixer to deal with the problems at inception. (This person is basically a head kicker, able to fire with a phone call and do the damage control ASAP.) They had a remote process from the Mexican end to corporate headquarters. That’s a classic mistake. The only way to control internal problems is with a fast moving process which can keep up with developments and stop the rot. You just can’t do these things at a bureaucratic pace any more.
