According to the NY Times' Pulitzer Prize-winning reporter David Barstow, Wal-Mart paid millions of dollars in bribes to Mexican authorities to expedite the company's rapid growth in the country, then conducted an internal investigation that served as a cover-up. Wal-Mart's policy on ethics states, "Never cover up or ignore an ethics problem," but presumably there's a footnote that allows for exceptions "when the company really needs to bring cheese sausages and trampolines to the people of Mexico." And there's reason to believe the company's culture of corruption would be right at home here in New York.
The bribes increased significantly after Eduardo Castro-Wright became Wal-Mart de Mexico's CEO in 2002. He has since been promoted to the position of vice chairman of Wal-Mart. A former real estate executive for the company, Sergio Cicero Zapata, informed Wal-Mart's headquarters in Arkansas that he was paying out bribes to Mexican officials, or anyone else that could buy the company influence.
In the interviews, Mr. Cicero recounted how he had helped organize years of payoffs. He described personally dispatching two trusted outside lawyers to deliver envelopes of cash to government officials. They targeted mayors and city council members, obscure urban planners, low-level bureaucrats who issued permits — anyone with the power to thwart Wal-Mart’s growth. The bribes, he said, bought zoning approvals, reductions in environmental impact fees and the allegiance of neighborhood leaders.
He called it working “the dark side of the moon.”
And here's the passage that undoes all of the glowing PR Wal-Mart has garnered to muscle its way into the New York City market:
In an interview with The Times, Mr. Cicero said Mr. Castro-Wright had encouraged the payments for a specific strategic purpose. The idea, he said, was to build hundreds of new stores so fast that competitors would not have time to react. Bribes, he explained, accelerated growth. They got zoning maps changed. They made environmental objections vanish. Permits that typically took months to process magically materialized in days. “What we were buying was time."
Apparently this was just fine with Wal-Mart's top executives: an internal investigation yielded nothing but six pages of vagaries. No one was punished, no one admitted wrongdoing.
New York City's Public Advocate Bill de Blasio released a statement today blasting the company: "New York City cannot open its doors to a company that sanctions bribery and then covers it up as a part of doing business...New Yorkers should be put on notice: there is no tactic too underhanded for Walmart to try in order to open here."
Manhattan BP Scott Stringer piles on: "Once again Wal-Mart has shown itself to be a bad corporate actor and a bad neighbor, a company whose black marks already include predatory pricing and blatant disregard for the rights of working men and women."
In December, after learning that the Times was reporting on the issue, Wal-Mart told the Justice Department that it was looking into possible violations of the Foreign Corrupt Practices Act, but that it was probably limited to "discrete" instances. Even so, can you believe how cheap this Blu-Ray of The Dilemma is?
[UPDATE] Wal-Mart has released a video statement on the matter. Here's David Tovar, VP of Corporate Communications for Wal-Mart.
