Wal-Mart Stores, Inc. (NYSE:WMT) has said that it has an on-going investigation regarding the allegations that its subsidiary, Wal-mart de Mexico S A B de C V (PINK:WMMVY) used bribery in order to change the zoning map and get a construction permit near the pyramids of Teotihuacan.
According to the world’s largest retail giant, the company started investigating the allegations last year. Wal-Mart Stores, Inc. (NYSE:WMT) said, “The allegations contained in the New York Times article surrounding events in 2003-2004 involving the permitting and licensing process for a Wal-mart de Mexico store in Teotihuacan, Mexico, have been part of the company’s ongoing investigation of potential violations of the U.S. Foreign Corrupt Practices Act.”
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In addition, the company stated that “We are committed to having a strong and effective global anti-corruption program everywhere we operate and taking appropriate action for any instance of non-compliance. We recognize that our effort to date is a work in progress, and there is more to be done as we continue building a world-class FCPA compliance program.”
Mike Duke, CEO of Wal-Mart Stores, Inc. (NYSE:WMT) also stated that the company is taking the issue very seriously while emphasizing that the company does not accept ethical violations.
According to the report by the New York Times, a Mexican official received $52,000 from Wal-Mart de Mexico and agreed to change the zoning map of the area.
The New York Times also reported that 19 Wal-Mart Stores were part of the Wal-Mex bribery. The retail giant’s Mexican subsidiary paid $341,000 in bribes to be able to construct Sam’s Club stores in Mexico City without a construction & environmental permit as well as urban-impact assessment.
Additionally, last April the management of Wal-Mart Stores, Inc. (NYSE:WMT) sent investigators in Mexico City to find out if Wal-Mart de Mexico obtained its construction permit trough ways bribery. The investigators found evidences of suspected payments worth $24 million, indicating bribes were paid. The executives of Wal-Mart’s Mexican subsidiary knew about it and tried to conceal the violations from the main office in the United States. The lead investigators concluded, “There is a reasonable suspicion to believe that Mexico and USA laws have been violated,” and suggested investigating the issue further.
Wal-Mart Stores, Inc. (NYSE:WMT) did not continue its investigation, nor did they inform the authorities in Mexico and the United States regarding the violation, instead the retail giant promoted Eduardo Castro-Wright, the executive responsible in the alleged bribery to vice chairman of Wal-Mart in 2008, according to the report from the New York Times.
The retail giant was compelled to conduct an internal investigation after the New York Times published a detailed reported regarding the alleged bribery.
According to Wal-Mart, the audit committee composed of independent directors is currently overseeing the investigation. It is also cooperating with the Department of Justice and Securities and Exchange Commission (SEC) regarding the matter.