Wal-Mart Pays—and Pays—in Response to the Bribery Probeby
Ever since allegations of bribery and corruption in Wal-Mart’s international operations emerged two years ago, the world’s biggest retailer has spent more than $400 million in legal fees and compliance costs. That makes it one of the most expensive probes in U.S. history. It’s not over yet: Walmart is conducting its own investigation, cooperating with a federal probe, and paying legal fees for dozens of executives.
We know how expensive lawyers can be. Now, thanks to Walmart’s first-ever Global Compliance Report, we also know how much the company has spent on improving its anti-corruption program and financial controls: more than $109 million. That figure will grow, too. In February, Walmart estimated that its bribery probe and compliance costs would total $200 million to $240 million for the year.
What has Walmart got for the money? According to the report, it now has a 2,000-person compliance infrastructure that includes a new global chief compliance officer, a global anti-corruption officer, and 10 chief compliance officers for specific markets, as well as regional officers and one for global e-commerce. The company also has executives with expertise in money-laundering regulations, licenses and permits, food safety, and 11 other areas. It has begun appointing monitors in all its international markets.
The audit committee of Walmart’s board of directors has been busy, too. It met more than any other committee last year, according to the just-released proxy statement, holding 22 meetings. Thirteen of them focused on the corruption investigation and compliance matters. One of the matters they reviewed was whether any senior executives should lose part of their cash bonuses for not making sufficient progress on the compliance program. The committee concluded that this wasn’t necessary.
The head of the audit committee, Christopher Williams, was also the best-compensated director, earning $384,821 for the year. Williams has been on the board for the past decade and is leaving in June, as Walmart requires.
A second director will retire in June as well: Lee Scott, who was chief executive officer of Walmart during the time under investigation. The company says his departure is “in line with Walmart’s historical practice for its prior CEO’s Board service.” Mike Duke, who headed Walmart’s international operations from 2005 to 2009 and served as chief executive from 2009 until January, remains on the board.