1. Did Walmart Violate the Foreign Corrupt Practices Act?
What should Walmart do? What would you do? Do some research and tell us what Walmart did after November 2012. Do you agree with their actions? Why or why not?
2. The Foreign Corrupt Practices Act of 1977 (FCPA) applies to all companies listed on the national securities exchange in the United States and their officers, directors, employees, agents, and shareholders. Wal-Mart’s subsidiary, Wal-Mart de Mexico, had been paying bribes in order to obtain permits, information, and favors from Mexican government officials. They also failed to keep detailed records that would reveal whether a violation had occurred.
Wal-Mart is one of largest companies in the World and thus should be setting the example for all other companies when it comes to business practices. When it was found out that Wal-Mart’s subsidiary, Wal-Mart de Mexico, was using bribes to receive special treatment, Wal-Mart should have taken proper steps to ensure that they were following the law. To hedge against future FCPA violations, Wal-Mart should implement a compliance program that teaches the laws, thoroughly evaluates third parties, implements accounting controls, and encourages prompt escalation of potential issues. Management should send a clear message to all employees foreign and domestic that the company is committed to complying with all applicable laws and standards of business ethics. Compliance should be a part of the company wide culture.
In November 2012 Wal-Mart disclosed that its internal investigation of the bribery allegations had extended from Mexico to China, India and Brazil. In December 2012 the New York Times published an investigation providing extensive new details about Wal-Mart’s bribery activities in Mexico, including payoffs to get zoning changes. Yet as of October 2015 no charges had been filed. t is highly unlikely that any meaningful change will occur in the near future. One of the most important obstacles to change is Wal-Mart’s business model, with its foundation in everyday low prices. This strategy imposes severe limits on any price increase; for fear that competitors will take away its market share. Nothing has really been done to implement any type of change. I did a research project on Wal-Mart in a previous class. I was very shocked to learn about Wal-Mart’s practices and how they operate in other countries. The worker a underpaid, work long hours, and are often mistreated. If no one steps in to force Wal-Mart’s hand, nothing is going to change.
3. When rumors began to surface about briberies within Walmart de Mexico, it was correct of Walmart to launch their own investigation in 2004 and also 2011 into the acts that were said to have taken place. By initiating the investigation on your own terms, you are accepting responsibility for the supposed actions rather than allowing a second-party investigation to take place and have them hand out penalties on their own, as in the 2013 case (Hill, Hult 54). While exposing your company for the actions that took place, you are also maintaining public relations by coming forward about it, and I would do the same thing if I were in charge when this took place rather than deny it and try to bury it.
After 2012, Walmart began to replace many of the top officials that were in charge when the bribery scandals took place overseas. Eight of Walmart’s senior officers quietly left after 2011 including the CEO H Lee Scott Jr. Walmart also revamped its compliance staff by about 30%, increasing it to 2,000 employees in an effort to “lead the way” in compliance and satisfy the Government during their investigations (Harris). This change of image will help Walmart learn from its mistakes and be an example for other major firms to avoid bribery and other public actions.