Last November, a massive fire at the Tazreen Fashions factory in Bangladesh killed over 100 garment workers. Just months later, in April of this year, Rana Plaza, an eight-story garment factory, collapsed, killing over 1,100 people in what has been called “the worst industrial accident in the history of the garment industry.” Both tragedies had a Walmart connection: Walmart-brand apparel was found in the rubble at Tazreen, and one of the factories in Rana Plaza listed Walmart as a customer it made goods for.
After the Rana Plaza tragedy in Bangladesh, Walmart issued a series of bold proclamations. Well, we here at WMTS decided that it might be worth checking in to see if Walmart has lived up to its promises.
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.
Three months ago, when Jim Cash was named Walmart’s new lead independent director, we noted:
It got overshadowed in the press coverage of the company’s disappointing same-store sales figures, weak traffic, and downward revision of guidance for the rest of the year, but Walmart reported yesterday that it spent about $82 million in the second quarter on FCPA and compliance matters—12 percent more than it spent in the first quarter and well above its projection of $65-70 million. Add that to the $230 million the company spent in Fiscal Year 2013 and the first quarter of Fiscal Year 2014, and the total reported spending to date on FCPA-related matters is $312 million.
Walmart’s taking yet another hit on labor issues today, as the U.S. Labor Department announced a corporate-wide settlement agreement between the Occupational Safety and Health Administration (OSHA) and Walmart that requires the company to fix safety and health problems in nearly 3,000 of its stores. Walmart is also required to improve training related to hazard communications and the use of trash compactors and harsh cleaning chemicals, and will pay a $190,000 penalty.
Everyone knows that the costs related to Walmart’s Foreign Corrupt Practices Act (FCPA) investigation are huge – more than $200 billion spent already. And all Walmart staff are familiar with the Walmart Global Ethics Office – it’s the place that most would go if they had information that might aid the investigation. But everyone probably doesn’t know about whistleblower protections that were part of the Dodd-Frank legislation passed in 2010. Under Dodd-Frank, employees are given financial incentives and anti-retaliation protections for reporting securities violations like the FCPA to the Securities and Exchange Commission.
It’s common knowledge that the FCPA investigations are costing Walmart a fortune. WMTS has previously documented the figure. What’s not known is when it will all end.
The final vote count from the Walmart annual meeting is in. With the Walton family owning a majority of company shares, the results were in effect pre-determined. (Spoiler alert: the vote went the way the Waltons wanted. And critics say the new board is weaker and less independent than the old one.) But like last year, the shareholder vote demonstrates considerable dissatisfaction with the company’s leadership, particularly audit committee chair Christopher Williams, CEO Mike Duke, and Chairman Rob Walton.