Wal-Mart CEO Says All Staff ‘Accountable’ for Standards
Wal-Mart Stores Inc. (WMT) Chief Executive Officer Mike Duke said all of the company’s staff are “accountable” for its standards and it has taken “a number of concrete steps” over the last year to strengthen its compliance programs.
The retailer is conducting an “aggressive investigation” into alleged violations of the U.S. Foreign Corrupt Practices Act and “will not tolerate violations anywhere or at any level of the company,” Duke said in a memo to employees yesterday, obtained by Bloomberg News.
“I want you to know we will continue to dedicate all the resources necessary to make certain we have strong anti- corruption programs everywhere we operate,” Duke said.
The company is the subject of a U.S. Justice Department criminal investigation into allegations of bribery in its Mexican subsidiary, according to a person familiar with the probe. Wal-Mart is conducting its own review of allegations that its representatives paid local officials in Mexico to get stores opened faster in the early 2000s.
Duke ordered a “worldwide review” in March last year to ensure it has “effective programs in every one of our markets,” and has tightened controls and oversight at its headquarters in Bentonville, Arkansas, he also said in the memo.
Jeff Gearhart, the company’s general counsel and corporate secretary, told employees in an April 21 memo that the alleged violations “occurred more than six years ago” and are “not a reflection of who we are or what we stand for.”
David Tovar, a company spokesman, confirmed the authenticity of both memos yesterday.
“My firm expectation is that Walmart will always follow the law, but my expectation also goes far beyond following the law,” Duke said in the memo. “We will do what’s right -- not just what is legal -- and our actions will show the utmost integrity at all times.”
The memos were sent to staff after an April 21 New York Times article said the bribes may have amounted to more than $24 million in payments. Gearhart’s memo said the company started a review of its anti-corruption program in the spring of 2011, which led to an internal investigation “late last year” involving outside lawyers and forensic accountants.
The alleged violations “involved claims of illegal payments in Mexico primarily to obtain permits for new stores,” Gearhart said in his memo. “None of us likes to hear our company talked about in this way. But I do not have to tell you that the alleged activity is not a reflection of who we are or what we stand for -- not now and not then.”
Wal-Mart has hired auditing firm KPMG and law firm Greenberg Traurig LLP for a compliance review of its global operations and law firm Jones Day to investigate its Mexican operations, said a person familiar with the matter.
Wal-Mart has said it has met voluntarily with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to discuss the case. The company is also enhancing its audit procedures and internal controls to escalate to management possible violations of the bribery law.
“We are moving aggressively to determine the facts,” said Gearhart, who is also an executive vice president.