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News updated at 5:37 PM IST

Walmart Mexico paid bribes to open stores: Report

New York, Dec 19, 2012, (PTI): 12:01 IST
A general view shows a Wal-Mart store in Mexico City, in this April 24, 2012 file picture. Wal-Mart Stores Inc's Mexican affiliate routinely used bribes to open stores in desirable locations, according to a New York Times investigation published December 17, 2012, which cites 19 instances of the retail giant paying off local officials. The banner reads, 'Low prices, every day, in everything'. REUTERS
Global retail giant Walmart, which is facing uproar in India over its lobbying efforts and allegations of bribery, has come under increased scrutiny after a US media report said that its Mexico affiliate bribed local officials to open stores in desired locations.

According to a New York Times investigation, Walmart de Mexico was "not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business.

"Nor did it pay bribes merely to speed up routine approvals. Rather, Walmart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited," the publication said.

Walmart's Mexico affiliate used bribes to subvert democratic governance — public votes, open debates, transparent procedures as well as to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It also used bribes to outflank rivals, the report said.

The report comes amid opposition in India over Walmart's lobbying efforts to enter the Indian market as well as allegations of bribery.

The US Justice Department and the Securities and Exchange Commission are conducting their own investigation of Walmart of possible violations of the Foreign Corrupt Practices Act, a federal law that prohibits American corporations or their subsidiaries to bribe foreign officials.

According to the Times report, Walmart Mexico was eyeing a location near Mexico's ancient ruins in Teotihuacan, north of Mexico City to open a store. However, zoning requirements were coming in the way of Walmart to open the store at this location.
But at the headquarters of Walmart de Mexico, executives were not about to be thwarted by the unfavourable zoning decision.

Walmart executives paid a USD 52,000 bribe to an official to change the zoning map to allow Walmart's store.

Walmart de Mexico broke ground on the location in 2004 amid fierce opposition by protesters who did not want a Walmart so close to a cultural spot.

The Times accessed confidential Walmart documents which identified 19 store sites across Mexico that were the target of Walmart de Mexico's bribes.

Matching information about specific bribes against permit records for each site, the Times found that dates of bribe payments coincided with dates when critical permits were issued.

The report said that bribes totalling USD 341,000 were paid on eight instances, including on one occasion to build a Sam's Club in one of Mexico City's most densely populated neighbourhoods near the Basilica de Guadalupe without a construction license, an environmental permit or even a traffic permit.

Another nine bribe payments totalling USD 765,000 were paid to built a vast refrigerated distribution centre in an area of Mexico City where electricity was so scarce that many smaller developers were turned away.

Responding to the allegations of bribery, Walmart spokesman David Tovar said in the Times report that the company is "committed to having a strong and effective global anticorruption programme everywhere we operate and taking appropriate action for any instance of noncompliance."

In Teotihuacan, the Times found that Walmart de Mexico executives approved at least four different bribe payments of more than USD 200,000 to build a medium-size supermarket.

Without these payoffs, it would not have been possible for Walmart to build the store in the location.

Walmart is the largest private employer in Mexico, employing 221,000 people working in 2,275 stores, supermarkets and restaurants.

The report said that Walmart de Mexico officials did not themselves pay bribes but that payoffs were made by outside lawyers and fixers.

According to Walmart de Mexico's written policies, these fixers could be entrusted with up to USD 280,000 to "expedite" a single permit.

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