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Issues To Consider From The Walmart Enforcement Action

Issues

This prior post went in-depth into the long-awaited Walmart Foreign Corrupt Practices Act enforcement action in which the company agreed to pay the DOJ/SEC approximately $283 million. This post highlights additional issues to consider from the enforcement action.

Timeline

Walmart was under FCPA scrutiny since approximately mid-2011. Thus, from start to finish its FCPA scrutiny lasted an unconscionable approximate 8 years. There is simply no excuse for this and the DOJ/SEC have long-recognized the issues associated with long-drawn out investigations.

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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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Friday Roundup

Roundup

Sentenced, just saying, scrutiny alerts and updates, fallout, and what’s the difference? It’s all here in the Friday roundup.

Sentenced

As highlighted in this prior post, earlier this year Frank James Lyon (the owner of Lyon Associates Inc. – a privately held engineering and consulting company headquartered in Hawaii) pleaded guilty to violating the Foreign Corrupt Practices Act (based on things of value provided to officials in the Federated States of Micronesia) as well as paying bribes to an agent of an organization receiving federal funds (based on things of value provided to officials with a Hawaii governmental agency – State Agency).

As highlighted in this DOJ release, Lyon was recently sentenced to 30 months in prison.

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Walmart Seven Years Later

Wal-Mart

Seven years ago this week 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.  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 and uniformed commentators who frequently display little regard for actual facts carried forward the narrative.  (See here for the December 2011 FCPA Professor post highlighting Wal-Mart’s FCPA disclosure and here for the prior post titled “Wal-Mart’s FCPA Scrutiny DID NOT Begin with the April 2012 NY Times Article).

Thus, this week is a false seven year anniversary of Wal-Mart’s FCPA scrutiny, but a meaningful anniversary nevertheless.

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Checking In On Wal-Mart’s Pre-Enforcement Action Professional Fees And Compliance Enhancements Expenses

Wal-Mart

In today’s 4Q earnings call presentation, Wal-Mart disclosed $6 million in Foreign Corrupt Practices Act and compliance related expenses ($3 million for ongoing investigations and inquiries and $3 million for global compliance program and organizational enhancements).

Doing the math, Wal-Mart’s 3Q FY2019 FCPA and compliance-related costs are approximately $97,000 per working day.

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