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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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Walmart’s FCPA Scrutiny Hits 7 Years

waitingpic

Among the many false narratives in the FCPA space is that Walmart’s FCPA scrutiny began with the New York Times front page article in April 2012. (See here).

However, as FCPA Professor readers know – because it was covered in real-time on this site – Walmart disclosed its FCPA scrutiny on December 8, 2011 (see here for the prior post).

Thus, if you are scoring at home, Walmart’s FCPA scrutiny is now seven years old.

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Wal-Mart’s Pre-Enforcement Action Professional Fees And Compliance Enhancements Top $900 Million

Wal-Mart

In yesterday’s 3Q FY2019 earnings call presentation, Wal-Mart disclosed $9 million in Foreign Corrupt Practices Act and compliance related expenses ($6 million for ongoing investigations and inquiries and $3 million for global compliance program and organizational enhancements). The 3Q figures are higher than 2Q figures and 1Q figures.

Doing the math, Wal-Mart’s 3Q FY2019 FCPA and compliance-related costs are approximately $145,000 per working day.

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Walmart’s $160 Million Ripple

Ripple

The article “Foreign Corrupt Practices Act Ripples” highlights how settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement.

Among other ripples are private shareholder suits.

In the aftermath of the New York Times April 2012 article (an article which did not lead to Wal-Mart’s FCPA scrutiny, but certainly magnified it to a whole new level) numerous shareholder suits rained down on the company.

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