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Wal-Mart’s Recent Disclosures

Wal-Mart

Last week, Wal-Mart made several disclosures that touched upon its Foreign Corrupt Practices Act scrutiny and compliance enhancements. The materials were released in advance of Wal-Mart’s June 2nd annual meeting.

This post highlights FCPA and related information in Wal-Mart’s Annual Report, Proxy Statement, and Global Ethics and Compliance Report. The later will be of interest to compliance practitioners.

In short, regardless of what may (or may not) have happened at Wal-Mart approximately 5-10 years ago, it is clear that Wal-Mart has become an industry-leader in FCPA compliance best practices. Anyone who fails to acknowledge this is simply not credible.

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Wal-Mart Five Years Later

Wal-Mart

Five years ago today, the New York Times published an article (here) titled “Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle.”

The conduct at issue in the Times article related to Wal-Mart’s largest foreign subsidiary, Wal-Mart de Mexico (“Wal-Mart Mexico), and suggested that Wal-Mart Mexico “orchestrated a campaign of bribery to win market dominance” and that the entity “paid bribes to obtain permits in virtually every corner” of Mexico.

The April 2012 NY Times article resulted in intense world-wide media scrutiny of Wal-Mart. However, it was known months before the NY Times article, that Wal-Mart was under FCPA scrutiny.  (See here for the December 2011 FCPA Professor post highlighting Wal-Mart’s FCPA disclosure). Like in many facets of modern life, the narrative that Wal-Mart’s FCPA scrutiny began with the NY Times article became more important than actual facts.

Thus, today is a false five year anniversary of Wal-Mart’s FCPA scrutiny, but a meaningful anniversary nevertheless.

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Checking In On Wal-Mart’s FCPA And Compliance-Related Expenses

Wal-Mart

In its recent 4Q FY2017 earnings call presentation Wal-Mart disclosed $17 million in Foreign Corrupt Practices Act and compliance related expenses ($12 million for ongoing investigations and inquiries and $5 million for global compliance program and organizational enhancements). The Q4 expenses of $17 million compare to Q3 expenses of $29 million, Q2 expenses of $28 million and Q1 expenses of $25 million.

Doing the math, Wal-Mart’s 4Q FCPA and compliance-related costs is approximately $275,000 per working day.

Over the past approximate 5 years, I have tracked Wal-Mart’s quarterly disclosed pre-enforcement action professional fees and expenses.

While some pundits have ridiculed me for doing so, it quickly caught on as the popular thing to do.

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Roundup of FCPA Developments

Roundup

Checking In on Wal-Mart

It’s always a best practice not to believe everything in a newspaper which cites to unnamed sources, but in any event the Wall Street Journal reports:

“Wal-Mart Stores Inc. tried and failed to settle a foreign-bribery probe that has stretched for five years and cost the company more than $820 million, according to people familiar with the federal investigation.

In the final weeks of the Obama administration, the world’s largest retailer and U.S. officials weren’t able to agree on a deal before Donald Trump’s inauguration, people familiar with the matter said. “Wal-Mart and the government are very far apart in terms of a settlement,’’ one of the people said Thursday.”

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Checking In On Wal-Mart

Wal-Mart

In its recent 3Q FY2017 earnings call presentation Wal-Mart disclosed $29 million in Foreign Corrupt Practices Act and compliance related expenses ($24 million for ongoing investigations and inquiries and $5 million for global compliance program and organizational enhancements). The Q3 expenses of $29 million are slightly higher than the Q2 expenses of $28 million.

Doing the math, Wal-Mart’s 3Q FCPA and compliance-related costs is approximately $465,000 per working day.

Over the past approximate 4.5 years, I have tracked Wal-Mart’s quarterly disclosed pre-enforcement action professional fees and expenses.

While some pundits have ridiculed me for doing so, it quickly caught on as the popular thing to do.

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