The Mexico bribery scandal at Walmart was a dark cloud over the company’s annual meeting and recent news regarding the company’s business practices around the world suggests more stormy weather ahead.
This week, Representative Elijah Cummings, of Maryland, and Representative Henry Waxman, of California, who are probing the bribery issue, revealed what they’ve learned so far.
The Congressmen were briefed by outside counsels for Walmart in May, who reported that they’d been retained to review the company’s anti-corruption policies in Mexico, Brazil, and China. The Congressmen said that as a result of the review, the outside counsel was recommending that Walmart “also evaluate its operations in India and South Africa.”
These details were revealed in a letter from Rep. Cummings and Rep. Waxman to Walmart CEO Mike Duke that the two released this week. In the letter, the Congressmen complain of Walmart’s unresponsiveness to their requests. Walmart has made none of its own staff—only outside counsel—available to discuss the company’s program to comply with the Foreign Corrupt Practices Act (FCPA).
Meanwhile, in China, one of the countries where Walmart is specifically looking into its FCPA compliance, a Walmart store in Dazhou was reportedly “found selling pork ribs made from diseased pigs, underscoring the poor management of meat supply and inspections in the country.” Just last October, Walmart was forced to temporarily close 13 stores in a neighboring Chinese province and was fined for falsely advertising pork as organic.
Just as word broke that Walmart might be expanding its corruption probe to South Africa, a report co-authored by Nobel Laureate Joseph Stiglitz came out calling on the company to put more money into a suppliers fund that the company agreed to implement as a condition of its purchase of a stake in Massmart Holdings Ltd. Bloomberg explains,
Wal-Mart’s purchase of Johannesburg-based Massmart was approved by South Africa’s Competition Tribunal last year, subject to the companies promising to refrain from firing employees for two years and setting up a 100 million-rand ($11.8 million) fund to assist local suppliers and manufacturers. Judge Dennis Davis, president of the Competition Appeal Court, ordered in March that three experts make recommendations on the mandate and conditions of the fund.
In their report, Stiglitz and co-author James Hodge said the fund should be increased to between 500 million rand and 2 billion rand, over five to ten years, a far cry from the initial plan.