Sign up for regular news, views and insights about corporate governance

Name
Email
Company
Job title
Industry

Close

Setting the benchmark in corporate integrity

Wal-Mart review compliance amidst bribery allegations in Mexico

Following bribery allegations that cost the company over $157m, retail giant reviews compliance operations

Wal-Mart Stores has announced plans to overhaul its compliance operations in the wake of bribery allegations in Mexico. Federal investigations are ongoing to determine if the retailer made use of bribes in exchange for government approval for store openings in Mexico, a violation of the Foreign Corrupt Policies Act (FCPA). The accusations have highlighted the need for a policy review at the company.

As part of the overhaul, the retailer will be bringing its compliance, ethics, investigations and legal departments into a single unit that will answer to the general counsel. There are also plans for senior managers to engage in providing quarterly reports on the implementation of the reviewed corporate compliance operations, including standards and controls, training and monitoring, according to a proxy statement by Wal-Mart. In late 2012, the company also announced the creation of the role of global chief compliance officer, currently held by Jay Jorgensen, a former law clerk at the US Supreme Court.

The overhaul has been prompted by the serious allegations made by the American federal authorities over irregularities in its Mexico operations. Wal-Mart has revealed that is incurred “$157m of professional fees and expenses” in the last fiscal year, relating directly to the investigation by the Justice Department, the Securities and Exchange Commission and Mexican authorities. It was reported last year that the company had intentionally suppressed an internal probe into the alleged bribery of Mexican officials, before the federal investigation was launched.

“Wal-Mart could have avoided many of these costs by implementing a few basic FCPA compliance processes,” Alexandra Wrage, president of TRACE, a membership association that works with companies to raise their anti-bribery compliance standards. “Ensuring a proper tone from the top, conducting proper due diligence on all third parties, and carefully monitoring foreign subsidiary compliance with ant bribery laws.”

The retail giant has also revealed its audit committee can cut or eliminate cash incentives for executives over the next financial year, if the progress in the implementation of the new corporate compliance programme is not satisfactory. Currently executive compensation is only based on factors like sales, operating incomes and return on investment.
Wal-Mart maintains that it is cooperating fully with ongoing investigations over the bribery allegations and that it is probably that the company will likely continue to suffer financial losses during the process.

 

News

FRC report reveals highs and lows of UK governance

A recent report by the FRC reveals the extent by which recent reforms have changed corporate governance in the UK, as well as the effect non-compliance has had on the organisation’s finances

Health audit ceases force’s IT system

Surrey Police forced to abandon failed multi-million pound computer system

Michael Woodford, king of whistleblowers

The former Olympus CEO exposed a $1.7bn fraud at the heart of one of Japan’s most important corporations, and became a symbol for whistle-blowers everywhere

New corporate governance guidance published

The QCA has published a new guidance code for SMEs, focusing primarily on delivering long-term shareholder value

EADS says shareholders to get higher dividends in future

Airbus owner signals change in strategy that may benefit shareholders

NSE establishes Corporate Governance Index

The NSE has partnered with the CBi in an attempt to offset perceptions of Nigerian capital markets being riddled with corruption

About the awards

The Corporate Governance Report Awards celebrates leaders and innovators in financial reportage, transparency and shareholder relations. We identify those organisations setting the standard in internal …

RBS shareholders file suit against bank and former directors

RBS shareholders have launched a class-action suit over the 2008 rights offering a few months before the bank was bailed out by British government

Reducing annual report clutter

The presence of clutter in an annual report actively detracts from its usefulness to both shareholder and investor alike

Deutsche ordered to improve internal controls

Imminent order by German regulator is likely to lead to Deutsche Bank reaching a settlement over Libor scandal

UAE discusses role of CSR in sustainable development

Philanthropy and sustainability debated at forum arranged by UAE’s University Leadership Council