NYT: Walmart Covers Up Mexican Bribery Scandal

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The New York Times is reporting that Walmart executives covered up details about bribery related to the building of new stores in Mexico and slowed an internal investigation into the bribery allegations. A former executive in Mexico told his superiors about a thorough campaign to bribe officials throughout the country in order to speed up the creation of stores so Walmart could establish market dominance. The executive knew the details personally and had detailed records. Initially Walmart sent investigators to Mexico to look into the matter and they found extensive corroborating evidence. That's when things went off the rails:

The lead investigator recommended that Wal-Mart expand the investigation.

Instead, an examination by The New York Times found, Walmart’s leaders shut it down.

Neither American nor Mexican law enforcement officials were notified. None of Walmart de Mexico’s leaders were disciplined. Indeed, its chief executive, Eduardo Castro-Wright, identified by the former executive as the driving force behind years of bribery, was promoted to vice chairman of Walmart in 2008. Until this article, the allegations and Walmart’s investigation had never been publicly disclosed.

But The Times’s examination uncovered a prolonged struggle at the highest levels of Walmart, a struggle that pitted the company’s much publicized commitment to the highest moral and ethical standards against its relentless pursuit of growth.

Under fire from labor critics, worried about press leaks and facing a sagging stock price, Walmart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show. Walmart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Walmart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Walmart executives focused more on damage control than on rooting out wrongdoing.

In one meeting where the bribery case was discussed, H. Lee Scott Jr., then Walmart’s chief executive, rebuked internal investigators for being overly aggressive. Days later, records show, Walmart’s top lawyer arranged to ship the internal investigators’ files on the case to Mexico City. Primary responsibility for the investigation was then given to the general counsel of Walmart de Mexico — a remarkable choice since the same general counsel was alleged to have authorized bribes.

The general counsel promptly exonerated his fellow Walmart de Mexico executives.

The story is so new, it's difficult to predict where things will go from here, but it's hard to see how Walmart doesn't face some legal trouble for the cover-up and for the bribery itself.

It seems like Mitt Romney has ties to the scandal:

Turns out, the former Walmart CEO who helped shut down an investigation of bribery by store officials in Mexico is an operating partner at a private equity fund started by Mitt Romney, his eldest son and his campaign finance director.

H. Lee Scott Jr. became an operating partner at the Romney fund, Solamere Capital, eight months after he left Wal-Mart in 2009. Solamere's partners and investors include major Romney campaign donors and staffers. Romney was a senior adviser and the first investor in the fund, putting up $10 million.

House Government Oversight Committee Members Elijah Cummings and Henry Waxman are launching an investigation into the scandal.


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