Earlier this year, the New York Times published a damaging report alledging that retail giant Wal-Mart (WMT) had engaged in widespread bribery in order to spread its footprint in Mexico.
Following the report, it was obvious that Wal-Mart had broken some laws, but there was still some confusion about how bad the situation was. A lot of people spoke out in Wal-Mart’s defense, claiming that corruption was a common thing in Mexico, and Wal-Mart was likely just a victim of cultural differences that required it to play by the same rules as other Mexican companies.
Had this been true, it would still not have excused the actions that Wal-Mart took in Mexico, but it at least would have explained the situation better. Most troubling was the fact that Wal-Mart shut down its own internal investigation, despite the fact that its internal investigation found plenty of evidence supported the bribery claims.
The New York Times has continued its investigation into the matter, and this new story makes even more serious allegations about the company's business in Mexico. According the Times, the situation was much worse than most people previously believed.
After conducting a lot of research in Mexico, the paper has identified 19 different store sites in Mexico that can be tied to bribery by Wal-Mart de Mexico. More troubling than the number of stores involved in the bribery is the assertion by the New York Times that Wal-Mart was definitely not a simple victim of Mexico’s culture, but instead “was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures.”
I suppose that this really should not come as too big of a shock to most people. Wal-Mart has a long history of having a hard time spreading its influence internationally, and with the amount of money it has to throw at problems, it is not too surprising to me that it used its financial influence in Mexico.
Perhaps bribery is common business practice in Mexico, but Wal-Mart should have known better. Its international image is so large that it is effectively a representative of the U.S. retail sector to the rest of the world. By engaging in the sort of behavior The Times accuses the company of engaging in, it has cast a black eye on the entire retail industry, and it should be forced to face some consequences for its actions.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.