The world’s largest retailer , Wal Mart Inc. have instead of broadening probe into the allegations of bribery at its subsidiary in Mexico , silenced the investigation going on.
The Times has reported about the issue , mentioning that back in 2005 one of the senior executives at the largest foreign unit in Mexico had written to a lawyer of the Wal Mart explaining how bribes were being paid for obtaining permits for opening the stores in his country.
In response investigation team was sent to Mexico which found hundreds of paper trails suspecting the payments totaling $24 million but the investigation was later called off and neither the U.S or Mexican law officials were informed about the issue.
According to the Times report the present Chief Mike Duke as well as the former CEO were aware of the investigation along with other senior executives.
Wal Mart have responded to the Times report saying that they had started an investigation last fall in compliance with the U.S foreign Corrupt practices act and they had also disclosed the minutes of the probe to SEC and the Department of Justice . And that most of the allegations are more than six years old and the firm doesn’t stand for such an image. They have taken adequate steps as required by the Foreign Corruptions Act for boosting up internal controls . None of the executives were however available for comments .
Wal Mart shall now face an uphill task in convincing the SEC and Justice Department that such issues are restricted to its operations in Mexico alone . If the corporate were involved in the cover up of the corruption then they could be facing grave compliance charges. Ahead of resolving the charges with the U.S authorities , the top priority for Wall Mart shall now be to eliminate corruption issues from pouting up from anywhere else , as questions of similar issues being there in its other foreign operations are likely to rise both from the government as well as the shareholders.
In Mexico , middlemen are generally used in helping the companies obtain permits for residency , resolve their tax issues and obtaining the authorization for planning. Their activity is legal in Mexico but the lack of transparency has made it difficult to know if those dealings involved bribery.
Walmex, as the company is known in Mexico , has rapidly expanded its operations in the country . The unit had total sales of $29 billion in 2011. Walmart’s fiscal sales for the current year were $443.85 billion.