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Mexican authorities investigating Walmart bribery scandal

The Americas Post - Some Mexican authorities may not be happy about Walmart bribery exposure

Mexico will proceed to investigate allegations that the Mexican unit of Wal-Mart Stores Inc bribed officials to expand its business there.

The Mexican federal comptroller’s office said it had begun checking the federal paperwork and permits that Wal-Mart de Mexico, known as Walmex, obtained to open and operate its stores in Mexico.

The comptroller’s office added that it would ask US authorities for information on the case, in order to carry out its investigation and that the federal government would take action if wrongdoing by public officials was detected.

Wal-Mart already faces a criminal probe by the US Department of Justice over potential violations of the Foreign Corrupt Practices Act (FCPA), a US law that forbids bribing foreign officials.

A spokesman for Walmex said the company had not been informed of any investigation in Mexico.

Mexican politicians had been calling for a probe into Wal-Mart, even though the economy ministry had initially said the allegations were not a federal matter.

Guillermo Tamborrel, a senator for President Felipe Calderon’s conservative National Action Party (PAN), said the scandal had tarnished Mexico’s reputation.

“We cannot let an international company come and corrupt our authorities,” Tamborrel said.

On Saturday, the New York Times reported that a senior Wal-Mart lawyer received an email from a former executive at Walmex in September 2005 describing how the Mexican affiliate had paid bribes to obtain permits to build stores in Mexico.

The newspaper said that senior Wal-Mart officials blocked an internal investigation into the alleged bribery, which involved suspect payments worth US$24 million.

Wal-Mart said that Tom Gean, a lawyer who has worked for the retailer for eight years, was placed in charge earlier this year of overseeing its compliance with FCPA.

Gean is a former US attorney for the Western District of Arkansas.

Wal-Mart also outlined the high-profile lawyers and accountants helping with its ongoing internal investigation into the matter, as well as its worldwide review of compliance.

Bentonville, Arkansas-based Wal-Mart has long been aware of the ramifications of the FCPA law.

Back in 2007, then-Chief Executive Officer Lee Scott made the connection between FCPA and the risk that can come with expanding into other countries.

At an analyst meeting, Scott was asked about whether Wal-Mart would look at entering Russia.

“We, as a company, are committed to ethical and responsible methods of running our business,” Scott said, according to a transcript of the meeting. “We will not position ourselves in a market in which we would jeopardise that. The Foreign Corrupt Practices Act is the only act that requires the incarceration of the CEO. And we are not going to do that.”

Scott is one of the top executives whom the Times said stymied an investigation into alleged bribery in Mexico earlier in the decade.

Also this week, a shareholder sued Wal-Mart’s board and several officers, seeking to recover damage to the company’s reputation as well as costs of investigating the claims.

Wal-Mart shares ended down 0.7% at $57.36 and Walmex shares gained 3.7% to close at 37.55 pesos on Wednesday.