The justice department is investigating potential criminal charges under the US Foreign Corrupt Practices Act, according to the person familiar with the probe who wasnt authorised to speak publicly about it. 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.
The investigations by the government and the company may prompt executive departures and US penalties if it reveals senior managers didnt take strong enough action, governance specialists said. The probes also may slow Wal-Marts expansion in Mexico and other markets.
The penalties paid by companies in settling these types of FCPA investigations have grown significantly larger in recent years, said Jeffrey Lehtman, a Washington-based partner with the law firm of Richards Kibbe & Orbe. Depending on the facts uncovered, companies like Wal-Mart can expect the penalties to be incredibly high.
The bribery allegations were described in an April 21 New York Times story. In a December 2011 US Securities and Exchange Commission filing, Wal-Mart said it was examining whether it was in compliance with the Foreign Corrupt Practices Act, without saying what region or time period was in question. It is an open question as to whether Wal-Marts prior disclosure would have allowed investors to understand the magnitude of potential exposure, said Lehtman, whose firm handles Foreign Corrupt Practices Act cases.
Alisa Finelli, a justice department spokeswoman, declined to comment. John Nester, an SEC spokesman, declined to comment on Monday on whether the agency plans to probe the Wal-Mart allegations.
The company said in an April 21 statement that it has met voluntarily with the justice department and the SEC to discuss the case. The company is also enhancing audit procedures and internal controls to escalate to management possible violations of the bribery law.
Jeff Gearhart, the companys 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.