Walmart Pays Lawyer Fees for Dozens of Execs in Bribery Probe

Walmart Mexico Bribery
APShoppers at a Mexico City Walmart Superstore in 2011.
By Aruna Viswanatha

WASHINGTON -- Walmart Stores is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation, according to people familiar with the matter, an unusually high number that shows the depth of the federal probe.

The U.S. Department of Justice is investigating whether Walmart (WMT) paid bribes in Mexico to obtain permits to open new stores there, and whether executives covered up an internal inquiry into the payments. The department is also looking into possible misconduct by the world's largest retailer in Brazil, China and India.

In recent months, the U.S. government has brought in a number of senior Walmart executives for questioning, including officials from corporate headquarters in Bentonville, Ark., the sources said. The move, along with widespread publicity about the probe, appears to have prompted executives to seek their own legal representation. The sources declined to name the executives who have submitted to interviews.

Walmart confirmed that it is footing the legal bills for executives touched by the corruption probe, %VIRTUAL-article-sponsoredlinks%but the company declined to give any specifics.

While it is common for companies in bribery investigations to cover executives' legal costs, experts said the large number of attorneys hired in the Walmart case suggests prosecutors are aggressively testing information that the company has turned over, and may be considering cases against multiple individuals.

"I've never heard of that many potential targets of an investigation no matter how big," said Richard Cassin, an anti-corruption lawyer and author of a popular blog on the law at issue, the Foreign Corrupt Practices Act.

"Those numbers suggest DOJ is really digging deep," he said.

Justice Department spokesman Peter Carr declined to comment. The investigation isn't close to a conclusion, and it isn't clear if any individuals will ultimately face criminal charges.

Walmart spokesman David Tovar said the investigation is ongoing and the company is cooperating with U.S. authorities. He said it isn't uncommon for individuals to retain counsel to advise them in such situations.

"It is inappropriate for us or others to come to conclusions until the investigation is completed," Tovar said.

The largest corporate foreign corruption case to date is Siemens' (SI) $1.6 billion settlement with the Justice Department and other authorities in 2008 over an alleged bribery scheme in Argentina. In that instance, around a dozen executives at the German engineering company had retained their own lawyers.

No individuals were initially charged, but after intense criticism from U.S. lawmakers, eight former Siemens executives and agents of the company were indicted in 2011. Most of the defendants are in Argentina or Germany, and the Justice Department has been unable to extradite them.


The New York Times reported in April 2012 that management at Walmart de Mexico orchestrated bribes of $24 million to help grow its business there and that top brass at the U.S. parent, including former chief executive H. Lee Scott Jr., were involved in a decision to stifle an internal inquiry.

The story also alleged that Eduardo Castro-Wright, a vice-chairman of Walmart, had been a driving force behind the bribery scheme when he was chief executive of Walmex. Castro-Wright retired soon after the story was published.

Scott and Castro-Wright haven't commented publicly about the allegations.

Sources said the government has directed its attention at senior Walmart executives, but declined to name which executives are targeted. Investigators have also spoken to employees at other levels of the company, two sources said. They and other sources weren't authorized to speak publicly about the matter.

Prosecutors have also spoken to Walmart executives who have spent time in China and India, one person said.

"Given the breadth of the investigation, this case could just be of staggering proportions," said University of Richmond law professor Andrew Spalding, an expert in anti-corruption law.

While cooperating with the government probe, Walmart is trying to complete its own investigation into the matter. As part of that internal probe, Walmart in 2012 disclosed it had hired at least three law firms to assist the company.

Jones Day was leading the internal probe, Cahill Gordon & Reindel was serving as outside counsel to the audit committee, and Greenberg Traurig was outside counsel for the company's worldwide compliance review, it said at the time.

Since law firms working on the investigation for the company usually don't also represent any of its employees if there could be a conflict of interest, Walmart executives have turned to many other top law firm for advice.

The law firms hired to represent individuals include Steptoe & Johnson; Miller & Chevalier; Crowell & Moring; Shearman & Sterling; Weil, Gotshal & Manges; and Ropes & Gray.

Walmart in September disclosed that it had spent some $155 million on the probes and related compliance changes between February and July. Its total tab to date is well over $300 million.

18 Facts About Walmart That Will Blow Your Mind
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Walmart Pays Lawyer Fees for Dozens of Execs in Bribery Probe

In fiscal year 2012, Walmart registered approximately $444 billion in sales, which is $20 billion more than Austria's GDP. If Walmart were a country, it would be the 26th largest economy in the world.

Photo: Wikimedia Commons, Andrew Bossi

Walmart has more employees worldwide — 2.2 million — than the population of Houston. The mega-retailer employs 1.4 million people in the U.S. alone.

Source: Walmart Corporate & Financial Fact Sheet

Photo: Flickr, jimmywayne

If Walmart were an army, it would have the second largest military in the world, behind China.

Photo: Wikimedia Commons, BrokenSphere

Walmart is bigger than Home Depot, Kroger, Target, Sears, Costco, and K-Mart combined.

Source: Seeking Alpha

Photo: Flickr, Kevin Dooley

The average family of four spends over $4,000 a year at Walmart.


Each week, Walmart serves more than 200 million customers at more than 10,400 stores in 27 countries.

Source: Walmart Corporate & Financial Fact Sheet

One of every four dollars Americans spend on groceries is spent at Walmart.


Photo: Flickr, G.e.o.r.g.e

In 2010, CEO Michael Duke's annual salary of $35 million earned him more in an hour than a full-time employee makes in an entire year.

Source: ABC News

In 2009, Walmart sold more bananas than any other item.

Source: Bloomberg

Photo: Flickr, PinkMoose

China's exports to Walmart accounted for 11 percent of the growth of the total U.S. trade deficit with China between 2001 and 2006.

Source: Economic Policy Institute

Photo: Wikimedia Commons, Agnieszka Bojczuk

If Walmart's more than 900 million square feet of retail space were spread out over one place it would take up roughly 34 square miles, which is about 1.5 times the size of Manhattan.

Photo: Wikimedia Commons: Daniel Schwen

Walmart parking lots alone take up an area roughly the size of Tampa, Florida.

Source: Walmart Watch

Photo: Wikimedia Commons: Wt90401

In 2000, Walmart was sued 4,851 times, or about once every 2 hours.

Source: USA Today

Photo: Wikimedia Commons, maveric2003

90 percent of all Americans live within 15 miles of a Walmart.

Source: Business Pundit

The Walton family has given away about 2 percent of its net worth to charity — Bill Gates is giving away 48 percent of his net worth and Warren Buffet 78 percent of his net worth.

Source: Business Pundit

An additional Walmart Supercenter per 100,000 residents increases average BMI (body mass index) by 0.25 units and the obesity rate by 2.4 percent.

Source: SSRN

The most frequent destination typed into GPS device Telenav is Walmart.

Source: Wireless and Mobile News

Photo: Wikimedia Commons, Attitude2000

Roughly 4,700 (about 90 percent) of international stores operate under a banner other than Walmart, including Walmex in Mexico, Asda in the UK, Seiyu in Japan, and Best Price in India.

Source: Walmart Corporate & Financial Fact Sheet

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