Wal-Mart not handling bribery and coverup crisis in effective ways

Few people outside its legion of loyal shoppers and millions of shareholders likes Walmart.

Certainly some of its 2 million associates don’t, judging from various lawsuits alleging discrimination in numerous forms. Seen as the bane of small-town business districts, the world’s largest retailer started altering the American shopping landscape two decades ago.

Walmart is the New York Yankees of selling — with 8,500 stores in 55 nations; it’s General Motors when General Motors was General Motors; it’s the bully on thousands of blocks that scared mom and pop commerce into closure. Bentonville, AK is at once a Mecca for hopeful suppliers, and the Death Star for competing retailers like Sears, K-Mart and Target.

And, like the Yankees losing the World Series or GM facing bankruptcy, there is a certain segment of folks who can’t help but chortle at the news Walmart allegedly dispensed $24 million in bribes to get its Walmex stores built in Mexico. Karma, baby.


The story’s a lip-smacker because it doesn’t just allege the bribery occurred, according to a former Walmex executive turned whistleblower, it says the executive revealed that in 2005 and company officials covered it up.

A company whistleblower told top corporate officials about the alleged bribes in 2005, The New York Times reported recently. The company launched but then shut down an internal inquiry and then failed to notify the Justice Department or the Securities and Exchange Commission of the allegations as required by law.

Wal-Mart issued a statement on Tuesday, saying that it had instituted new protocols to make sure that FCPA [Foreign Corrupt Practices Act] investigations are “managed consistently and independently” and that it had created a new role for a global FCPA compliance officer. “We are taking a deep look at our policies and procedures in every country in which we operate,” said company spokesman David Tovar.

Is Walmart managing this crisis as well as it sells shoes, books and CDs? No. First, Walmart must be more aggressive in crisis management because its bully reputation makes it hard to love and easy to hate. Creating a watchdog position seven years after the reveal won’t win a lot of points.

It appears Walmart knows wrongdoing occurred and rather than coming out and saying so, admitting mistakes, apologizing and swallowing its punishment, it’s ducking and weaving.

Tovar’s statement all but admits the transgressions. And facing SEC and DOJ sanctions and fines won’t be cheap. But this is a company ranked No. 1 on the Fortune 500 with $419 billion in annual sales and operating income of $25.5 billion in 2011.

If anyone can survive a crisis like this, Walmart can. But it must act, from the top. CEO Michael Duke should personally respond to the allegations, take responsibility for tracking  down the facts and answer questions. If he does that soon, he might avoid a Congressional subpoena to do so.

Oh, and if he has to testify before Congress, fly commercial  from Bentonville.


About steveoncrisis

The content is about crisis management and mismanagement in a digital age. It comes from Steve Bell, who spent 30 years as a journalist for the Associated Press and as managing editor and editorial page editor at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower and Associates, one of the nation's largest independent advertising, integrated marketing and public relations agency with six offices in the Northeast and Southeast.
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