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The Underwhelming Walmart Enforcement Action

Wal-Mart

Last week Walmart resolved its long-standing Foreign Corrupt Practices Act scrutiny by agreeing to pay approximately $283 million to the DOJ/SEC (see here and here for prior posts).

$283 million is $283 million.

However, as highlighted in this post (a post informed by FCPA practice experience including conducting FCPA internal investigations around the world and having read and analyzed every FCPA enforcement action in the 40+ year history of the FCPA), the actual allegations / findings in the enforcement action are truly underwhelming and bear little resemblance to the “bribery” and “corruption” headlines that have been written by various media outlets in recent days.

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Approximately 7.5 Years After Disclosing FCPA Scrutiny, Walmart FINALLY Resolves FCPA Enforcement Action

Wal-Mart

As highlighted in this prior post, in late 2011 Walmart disclosed that it began “an internal investigation into whether certain matters, including permitting, licensing and inspections, were in compliance” with the FCPA.

So began arguably one of the most high-profile instances of corporate scrutiny in Foreign Corrupt Practices Act. history. The scrutiny FINALLY came to an end yesterday as the DOJ and SEC announced (here and here) a coordinated $282 million enforcement action. As highlighted in this prior post, Walmart disclosed this likely settlement amount in November 2017,  yet it still took approximately 1.5 additional years to formally resolve the matter.

This post summarizes the DOJ and SEC’s enforcement action concerning alleged improper conduct in the following countries: Mexico, Brazil, India and China.  Future posts will explore numerous other issues relevant to the enforcement action.

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Spot On Observations Regarding The Telefonica Brasil Enforcement Action

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Previous posts here and here discussed the SEC’s recent Foreign Corrupt Practices Act enforcement action against Telefonica Brasil (focused on the company hosting Brazilian officials at soccer matches in Brazil) as well as the many problematic issues associated with the expansive enforcement action.

The most recent edition of the always informative FCPA Update by Debevoise & Plimpton likewise takes issue which various aspects of the enforcement action. Kara Brockmeyer (the SEC’s former FCPA Unit Chief) is the lead author of the spot on article which states in pertinent part:

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Issues To Consider From The Telefonica Brasil Enforcement Action

Issues

This previous post went in-depth into the recent $4.1 million FCPA enforcement action against Telefonica Brasil and this post continues the analysis by highlighting additional issues to consider.

What Is The U.S. Interest?

According to the SEC, Telefonica Brasil (a subsidiary of Spanish multinational Telefonica S.A. and the largest telecom company in Brazil with 34,000 employees and $14 billion in revenue) purchased 1,860 World Cup tickets for a total of approximately $5.1 million “for relationship-building activities with strategic audiences.”

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Further To The SEC’s Inconsistent Approach To Enforcing The FCPA’s Books And Records And Internal Controls Provisions

inconistent

I recognize that I can be a creature of habit, but when an issue – such as the SEC’s inconsistent treatment of FCPA violations – is so frequent I will keep on writing about it. So here goes the umpteenth post on this issue. (See here for other examples).

A basic rule of law principle is consistency. In other words, the same legal violation ought to be sanctioned in the same way. When the same legal violation is sanctioned in materially different ways, trust and confidence in law enforcement is diminished.

However, there sure does seem to be a lack of consistency between how the SEC resolves Foreign Corrupt Practices Act books and records and internal controls violations.

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