Shares of Wal-Mart fell on Monday amidst allegations that its management mishandled allegations of bribery in Mexico, failing to notify officials that it had closed its internal investigation. The New York Times is reporting that the world’s largest retailer stymied an internal probe into bribery at its Mexican affiliate in the mid-2000’s.
Wal-Mart responded by saying that it had disclosed its probe to the U.S. Department of Justice and the Securities and Exchange Commission. Additionally, management said that it had taken steps at the Mexican unit to boost internal controls to make sure it was compliant with the Foreign Corrupt Practices Act (FCPA).
According to the article, in September 2005, a Wal-Mart lawyer was notified by a former executive at Wal-Mart de Mexico of the use of bribery to speed up store openings in the country. The company then sent investigators to Mexico, finding a trail of payments totaling more than $24 million, before shutting down the investigation before disclosing the investigation to U.S. or Mexican law enforcement.
If the allegations prove to be true, many believe it could be a cloud that hangs over Wal-Mart for some time. It could result in a time consuming probe of Wal-Mart’s other global businesses, likely at a significant cost and hampering international expansion.
Wal-Mart (WMT : NYSE : US$59.55), Net Change: -2.90, % Change: -4.64%, Volume: 35,975,348
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