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Wal-Mart jolted by bribery allegations

Publish date: 26 April 2012
Issue Number: 312
Diary: Legalbrief Forensic
Category: General

The world's biggest retailer has been jolted by bribery allegations. A report in Business Report notes that Wal-Mart Stores Inc lost $10bn of its market value on Monday on concerns that a bribery investigation in Mexico could be very costly and hinder its plans to grow.

According to the report, two US lawmakers said they were launching their own investigation into allegations in a New York Times article that Wal-Mart de Mexico had engaged in a multi-year campaign of bribery to build its business. In Mexico, the front-running presidential candidate, Enrique Pena Nieto, and lawmakers also called on local authorities to investigate. The report notes that if the allegations are true, Wal-Mart may have violated the US Foreign Corrupt Practices Act, which forbids bribes to foreign government officials, as well as run afoul of Sarbanes-Oxley rules that require corporate gatekeepers to report material violations of securities laws. The New York Times reported on Saturday that a senior Wal-Mart lawyer received an email from a former Walmex executive in September 2005 that described how the Mexican company had paid bribes to obtain permits to build stores in the country. According to the report, Wal-Mart sent investigators to Mexico City and found a paper trail of suspect payments totalling more than $24m. But the company's leaders shut down the probe and did not notify US or Mexican law enforcement officials until after the newspaper informed Wal-Mart that it was looking into the issue, the report noted. Wal-Mart said it was deeply concerned about the matter and began an investigation into its FCPA compliance last autumn. It said it disclosed the probe to the US Department of Justice and the Securities and Exchange Commission. Full report in Business Report Full report in The New York Times