Published: October 19, 2015 10:32 IST | Updated: October 19, 2015 10:33 IST Washington, October 19, 2015
Walmart paid millions of dollars in bribes in India: report
Reuters
There was no immediate response from Walmart’s corporate headquarters here on the Wall Street Journal’s report on its bribery in India.The Wall Street Journal said Walmart’s "suspected bribery" unearthed in India involves thousands of small payments to low-level local officials.
America’s multinational retail corporation Walmart is suspected to have paid bribes worth millions of dollars in India, according to a media report.
In a major report, The Wall Street Journal said Walmart’s “suspected bribery” unearthed in India involves thousands of small payments to low-level local officials to help move goods through customs or obtain real-estate permits.
“The vast majority of the suspicious payments were less than $200, and some were as low as $5, the people said, but when added together they totalled millions of dollars,” the daily said. In 2013, Walmart shelved plans to open retail stores in India by severing a joint venture with Bharti Enterprises Ltd and instead decided to become solely a wholesaler, the report said.
Walmart, who was pushing the previous UPA regime for opening of the multi-brand retail sector was also involved in lobbying before the U.S. Congress in this regard, Congressional disclosure reports have said in the past few years.
According to the report, Walmart’s massive bribery efforts is unlikely to bring in any penalty on it as its Indian operation does not yield any profit under the provisions of the Foreign Corrupt Practices Act (FCPA) of the United States.
“Because penalties under the FCPA are often connected to the amount of profit the alleged misconduct generated, the payments in India wouldn’t be likely to result in any sizable penalty, since Walmart’s operations there haven’t been particularly profitable, said people familiar with the matter,” the daily reported.
There was no immediate response from Walmart’s corporate headquarters here on the Wall Street Journal’s report on its bribery in India. According to The Wall Street Journal, federal investigators “found evidence of bribery in India, centering on widespread but relatively small payments made to local officials there,” during the course of its “high-profile federal probe” into allegations of widespread corruption at Walmart Stores Inc’s operations in Mexico.
http://www.thehindu.com/business/Industry/walmart-paid-millions-of-dollars-in-bribes-in-india-report/article7779884.ece?homepage=true
Wal-Mart Bribery Probe Finds Few Signs of Major Misconduct in Mexico
WASHINGTON—A high-profile federal probe into allegations of widespread corruption at Wal-Mart Stores Inc.’s operations in Mexico has found little in the way of major offenses, and is likely to result in a much smaller case than investigators first expected, according to people familiar with the probe.
The three-year investigation isn’t over, but most of the work has been completed, and it is possible the case could be resolved with a fine and no criminal charges leveled against individual Wal-Mart executives, these people said.
As part of the same investigation, investigators found evidence of bribery in India, centering on widespread but relatively small payments made to local officials there, the people said. Wal-Mart is likely to face U.S. foreign-bribery charges under the Foreign Corrupt Practices Act over those payments, they said.
Wal-Mart spokesman Greg Hitt declined to discuss the particulars of the investigation, but said the company is “cooperating fully with the government in this matter.’’
Mr. Hitt added that adherence to anticorruption laws is “a key priority’’ for the retailer, which works with third-party compliance experts “as we continuously review and strengthen our programs around the world.’’
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A Justice Department spokeswoman would say only, “We have an active ongoing FCPA investigation and will decline to comment further.’’
The Justice Department launched its investigation after a pair of 2012 New York Timesarticles about alleged bribes the world’s largest retailer by revenue might have paid in Mexico to obtain permits to build stores there, the people said. Mexico is home to about 20% of Wal-Mart’s roughly 11,500 locations.
The articles portrayed in detail millions of dollars Wal-Mart’s Mexico unit allegedly paid to middlemen. They described permits that had previously been hard to obtain coming through within days or weeks after the alleged payments. The articles also described how senior Wal-Mart executives appeared to shut down an internal inquiry into the suspicious payments.
The U.S. government’s probe involved some two dozen prosecutors, agents and investigators from the Justice Department, the Federal Bureau of Investigation, the Securities and Exchange Commission and the Internal Revenue Service’s criminal investigations unit, said people familiar with the matter.
These people said a grand jury was convened in Virginia to weigh whether the company or its executives violated the FCPA, which bars U.S. companies and individuals from paying bribes overseas to win business. The grand jury’s current status couldn’t be established.
The probe uncovered evidence that contradicted some of the allegations in the New York Times articles, said people familiar with the investigation. The five-year statute of limitations made it very unlikely that other instances of alleged misconduct could be prosecuted, these people said. But it is still possible, these people said, that new evidence could emerge at the final stages of the investigation to change officials’ view of the case.
They said the federal findings so far largely match up with the results of an internal probe Wal-Mart launched in the wake of questions from the New York Times.
Matt Purdy, the New York Times’ deputy executive editor, said the stories “were largely based on internal Wal-Mart documents that described hundreds of suspect payments involving millions of dollars. One of those documents, written by Wal-Mart’s own investigators, concluded that there was ‘reasonable suspicion’ to believe Wal-Mart de Mexico repeatedly violated the Foreign Corrupt Practices Act. To this day, Wal-Mart has not taken issue with the articles we published. Instead, the company says it has spent tens of millions of dollars to improve its compliance with anticorruption laws and it has removed several key executives involved in the matter.”
In the wake of the articles, which were awarded the Pulitzer Prize for investigative journalism, Wal-Mart said in a Mexican regulatory filing that it had removed its general counsel in Mexico, “in the interests of the investigation,” but declined to elaborate. It also says it undertook an extensive internal probe of the bribery allegations, and has spent more than $650 million on the probe and related compliance upgrades.
Much of the suspected bribery investigators unearthed in India involves thousands of small payments to low-level local officials to help move goods through customs or obtain real-estate permits. The vast majority of the suspicious payments were less than $200, and some were as low as $5, the people said, but when added together they totaled millions of dollars.
The people said investigators found similar payments in Mexico, but the bulk of such activity seemed to be in India. In 2013 Wal-Mart shelved plans to open retail stores in India by severing a joint venture with Bharti Enterprises Ltd., and instead decided to become solely a wholesaler there.
Because penalties under the FCPA are often connected to the amount of profit the alleged misconduct generated, the payments in India wouldn’t be likely to result in any sizable penalty, since Wal-Mart’s operations there haven’t been particularly profitable, said people familiar with the matter.
Industry watchers and legal experts said the initial revelations suggested a more dramatic outcome. After the first New York Times report on the alleged Mexican bribes in April 2012, Wal-Mart’s shares fell around 5%, erasing $10 billion in market value. Shares in its Mexico subsidiary, Wal-Mart de Mexico SAB, tumbled 12% on the report.
“It’s totally unexpected,” said Richard Cassin, an expert on foreign-bribery law who writes about FCPA cases, referring to the unlikelihood of a large criminal fine or charges against any Wal-Mart executives. “There weren’t a lot of outright denials from the company…There was a big assumption that with Wal-Mart, where there was smoke there was fire.”
The Justice Department and the SEC have stepped up their efforts to enforce the FCPA in recent years. In the largest such case to date, German engineering conglomerate SiemensAG pleaded guilty and paid $800 million to U.S. authorities in 2008 to resolve charges that it paid over $800 million in bribes to win contracts around the world. These ranged from a $1 billion national identity card project in Argentina to a mobile phone project in Bangladesh.
More recently, French power company Alstom SA pleaded guilty last December and paid $772 million to resolve charges that it paid tens of millions of dollars in bribes in Indonesia, Saudi Arabia and elsewhere to win power and transportation contracts.
—Sarah Nassauer contributed to this article.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Devlin Barrett atdevlin.barrett@wsj.com
Mexico and India taking bribes? Oh my stars and garters! I'll avert my virginal eyes away from such filth. Where's my fainting couch?
Yeah...our politicians don't take bribes...They just get paid $500,000 for a 20 minute speech through a tax free charitable donation!
Nothing to see there.....oh no no no....
There's no such thing as a 'bribe' in Mexico. The payment is just part of the permit fee. The Justice Dept. is just looking to fine any and every company it can. Trying to impose the FCPA on the rest of the world is making sure that US companies lose a lot of business.
Our politicians don't ask for bribes; they just ask for 'campaign contributions'.
TDP senior leader Revanth Reddy has said that Congress general secretary Rahul Gandhi was acting like the brand ambassador of Walmart.
Rahul Acting Like Walmart Brand Ambassador: Revant
TDP senior leader Revanth Reddy has said that Congress general secretary Rahul Gandhi was acting like the brand ambassador of Walmart.
Speaking to the media here on Monday, he has strongly assailed the Congress party and the UPA government to organize a big rally to invite FDIs in retail market in the country. He said it was as if Raahul Gandhi was acting like ambassador of foreign brands in the name of Public Conclave held by the Congress at Ramlila grounds on Sunday. He has demanded that the surname Gandhi should be removed by Sonia and Rahul, as they are fighting for foreign investments while the Mahatma had opposed just that during his freedom struggle. He said it was strange that Sonia Gandhi who was encouraging corruption described it as cancer.
He said though Sonia spoke on corruption for 16 minutes, PM for 20 minutes and Rahul Gandhi for 18 minutes, they had not said what action they proposed on the corrupt, excepting describing corruption as cancer. He said members of Sonia Gandhi family who were facing corruption charges should remove Gadhi from their names. He said Congress party was making the country as the playground for corruption, in the name of liberalization. He has demanded that Congress should state the steps it would be taking to curb corruption and urged the people to boycott the party. (NSS)