Walmart to Pay $282 Million in Settlement of Bribery Probe -- WSJ

Date : 06/21/2019 @ 7:02AM
Source : Dow Jones News
Stock : Walmart Inc (WMT)
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Walmart to Pay $282 Million in Settlement of Bribery Probe -- WSJ

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By Dave Michaels and Sarah Nassauer 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (June 21, 2019).

Walmart Inc. agreed to pay $282 million to resolve yearslong criminal and regulatory investigations into whether it paid bribes around the world, agreeing that it had lax policies in place to catch potential corruption.

The resolution comes after more than six years of settlement talks between Walmart and the U.S. government.

The deal requires Walmart to return $144 million in gains to the Securities and Exchange Commission and pay a $138 million penalty to the Justice Department. The SEC said the company's actions violated the Foreign Corrupt Practices Act, which effectively forbids U.S.-listed companies from paying bribes to win business abroad.

The Justice Department began its investigation as a result of a series of 2012 New York Times articles that described payments Walmart made in Mexico to obtain permits to build stores there. The probe later examined Walmart's business across the globe, including in Brazil, China and India.

"We're pleased to resolve this matter," Walmart Chief Executive Officer Doug McMillon said in a written statement. "We've enhanced our policies, procedures and systems and invested tremendous resources globally into ethics and compliance."

Two years ago Walmart said that it would record a $283 million charge related to the settlement.

The SEC's civil order alleged that Walmart targeted global growth during the 1990s without immediately ramping up its systems to account for corruption risks. Walmart has spent more than $900 million since 2012 on an internal investigation of the allegations and related compliance improvements, the company said.

Walmart's Brazilian subsidiary pleaded guilty to one count of violating the foreign-corruption law. The Justice Department agreed not to prosecute Walmart Inc. as long as it pays its penalty, maintains its anticorruption compliance program and retains an outside compliance monitor for two years.

The company sold a majority stake in its Brazilian operations last year to a private-equity firm.

Walmart sought to wrap up the probe during the final weeks of the Obama administration. The company and U.S. officials weren't able to agree on a deal, clashing over issues including Walmart's eligibility to continue accepting food stamps in its around 5,300 U.S. stores.

A company that pleads guilty to a federal crime can lose its right to win government contracts. Walmart will continue to accept Supplemental Nutrition Assistance Program benefits after reaching an agreement with the government, said Randy Hargrove, a Walmart spokesman.

Monitors will observe corporate anticorruption compliance efforts at Walmart headquarters, as well as in other countries including Argentina, Chile, Japan and South Africa, Mr. Hargrove said.

U.S. authorities in May 2017, shortly after the beginning of the Trump administration, sought a fine of $300 million to settle the probe, a penalty far less than the $1 billion sought by government enforcers toward the end of the Obama administration.

The SEC's settlement order with Walmart said the company's "low-cost philosophy" contributed to its insufficient policies to combat corruption risks in Brazil, India, Mexico and China.

Walmart operated in countries where intermediaries were allegedly paid to speed up store permits and licenses, according to the SEC.

"Walmart valued international growth and cost-cutting over compliance," said Charles Cain, chief of the SEC's foreign corruption unit. "Walmart repeatedly failed to take red flags seriously."

A Walmart unit in Brazil used a consultant known as the "sorceress" or the "genie" for their success in obtaining permits that were needed to open stores, the SEC's order alleged. Former employees of a construction company building one store believed the consultant was possibly a government employee. One former worker said the consultant admitted to needing money for "people I have to pay," the SEC's order said.

The consultant was paid about $527,000 in 2009 and 2010 to obtain licenses and permits, the SEC alleged.

The corruption claims also spurred shareholder lawsuits.

Last year Walmart agreed to pay $160 million to settle a long-running shareholder class-action suit brought by the City of Pontiac General Employees' Retirement System. Walmart didn't admit fault as part of the settlement, the company said at the time.

Write to Dave Michaels at and Sarah Nassauer at


(END) Dow Jones Newswires

June 21, 2019 02:47 ET (06:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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