Big news today for Walmart director Tim Flynn, who also sits on the board of JPMorgan: JPMorgan and four regulators announced a settlement on the London Whale matter in which the company will pay $920 million in fines and acknowledge misconduct by company management.
Interestingly, with Flynn on its Board of Directors and the Board’s Risk Policy Committee, JPMorgan has taken an approach to crisis management that’s not terribly unlike what Flynn did when KPMG was facing major scandal. When Flynn became president of KPMG U.S. in 2005, eight KPMG partners were under indictment for establishing billions of dollars in fraudulent tax shelters. Under Flynn, KPMG quickly released a statement accepting “full responsibility by former KPMG partners,” fired the people involved in the fraud, and agreed to a $456 million settlement with the federal government.
This head-on approach gave Flynn a reputation for business ethics and integrity that was likely a significant reason he was named to the Board of Directors for both JPMorgan and Walmart in mid-2012. Both companies were in dire need of a reputation boost: JPMorgan was in the midst of the London Whale scandal, while Walmart was just three months removed from the shocking New York Times report on alleged systematic bribery and subsequent executive-led cover-up in Walmart’s Mexican division. (Remember: Nobody has yet been held publicly accountable for their role in either the initial alleged bribery or the subsequent cover-up. But we do know that Rob Walton, Mike Duke, and Lee Scott were all personally made aware of the bribery allegations in Mexico.)
Flynn is on the Walmart Board of Directors audit committee—the body that is charged with leading the internal investigation of the bribery and FCPA allegations at Walmart. With Flynn on board, we’ll be curious to watch how Walmart will handle this matter in the months to come. JPMorgan CEO Jamie Dimon once called the London Whale scandal a “tempest in a teapot,” but today stated that the company “accept[s] responsibility and acknowledge[s] our mistakes.” Will we see a settlement and a Dimon-like statement from Mike Duke accepting responsibility for Walmart’s mistakes?