MetLife Inc. (MET) must probe whether Eduardo Castro-Wright should remain on the insurer’s board after the New York Times reported that the Wal-Mart Stores Inc. (WMT) unit he ran in Mexico paid bribes to government officials, a Yale University professor said.
“This requires an investigation immediately by the MetLife board,” said Jeff Sonnenfeld, senior associate dean at the Yale University School of Management, in an interview today. “This certainly has put a question mark around his ability to be a beacon of integrity. At a minimum, this is going to bring a distraction to MetLife.”
Castro-Wright, 57, a member of MetLife’s Governance and Corporate Responsibility Committee, was “the driving force behind years of bribery” in Mexico before Wal-Mart named him vice chairman in 2008, according to former executives, the Times reported April 21. He joined MetLife’s board in March 2008, about three years after Wal-Mart promoted him to chief operating officer of its U.S. stores unit.
“MetLife became aware of this situation through recent media reports,” said John Calagna, a spokesman for the insurer. “Wal-Mart has indicated in these reports that it is investigating the matter. Therefore it would not be appropriate for MetLife to comment at this time.”
Wal-Mart said the retailer is taking steps to ensure compliance with the U.S. Foreign Corrupt Practices Act and has met with the U.S. Department of Justice and Securities and Exchange Commission to discuss the case.
“Every second MetLife doesn’t give a public statement that it is investigating these allegations is a mistake,” Sonnenfeld said. “It’s not OK to wait for further investigation. They don’t have to be the judge and jury, they don’t have to come out with a judgment, but they have to at least demonstrate they are looking into it.”
MetLife, the largest U.S. life insurer, cited Castro- Wright’s experiences outside the country when he was appointed to the board.
“His leadership roles at several well-known brands in the U.S., as well as in the Latin America and Asia-Pacific regions, will undoubtedly benefit MetLife as we continue to grow our businesses outside of the U.S.,” Robert Henrikson, MetLife’s chief executive officer at the time, said in a statement announcing Castro-Wright’s selection.
Castro-Wright’s term on MetLife’s board expires at the 2014 annual shareholders’ meeting, according to the insurer’s proxy statement. This year’s annual meeting is scheduled for tomorrow, according to the filing.
‘Mitigation of Risks’
MetLife’s governance committee “oversees the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards,” the insurer said last month in the proxy. Castro-Wright, who also serves on the compensation and investment committees, was paid $259,124 for his work at the insurer last year, including $145,000 in cash and $112,502 in stock awards, the filing shows.
Wal-Mart de Mexico, in a statement, said it’s committed to complying with the laws in countries where it operates and the story’s allegations, “if true, do not accurately reflect Wal- Mart de Mexico y Centroamerica’s culture.”
In another statement after the Times story was published, the retailer said, “We will not tolerate noncompliance with FCPA anywhere or at any level of the company.” The firm said it has taken steps to ensure stronger FCPA compliance, including training and enhanced auditing procedures.
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