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

In yesterday’s 2Q FY2019 earnings call presentation [1] WalMart disclosed $8 million in Foreign Corrupt Practices Act and compliance related expenses ($5 million for ongoing investigations and inquiries and $3 million for global compliance program and organizational enhancements).

Doing the math, Wal-Mart’s 2Q FY2019 FCPA and compliance-related costs is approximately $130,000 per working day.

Over the past approximate 6 years, I have tracked Wal-Mart’s quarterly disclosed pre-enforcement action professional fees and expenses. While some pundits ridiculed me [2] for doing so, it quickly caught on as the popular thing to do.

And with good reason because, as has been noted in prior posts and in the article “Foreign Corrupt Practices Act Ripples [3],” settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from corporate FCPA scrutiny. Pre-enforcement action professional fees and expenses are typically the largest (in many cases to a degree of 3, 5, 10 or higher than settlement amounts) financial hit to a company under FCPA scrutiny.

Indeed, in Wal-Mart’s case the company has previously disclosed an anticipated FCPA settlement amount of $283 million.

[4]

In the aggregate, Wal-Mart’s disclosed FCPA and compliance-related costs are as follows.

FY 2013 = $157 million

FY 2014 = $282 million

FY 2015  = $173 million

FY 2016 = $126 million

FY 2017  = $99 million

FY 2018 = $40 million

FY 2019 = $15 million (Q1 and Q2)

TOTAL: $892 million

FCPA Institute - Nashville (April 11-12, 2019)

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