Checking In On The Wal-Mart FCPA-Related Securities Fraud Action
As highlighted in this October 2014 post, a securities fraud class action against Wal-Mart and certain former executives in connection with its Foreign Corrupt Practices Act scrutiny made it past the motion to dismiss stage.
It is unusual for such claims to proceed to trial and the Wal-Mart action, if it follows the typical path, is unlikely to proceed to trial.
Yet this post highlights two pre-trial developments in the case. The first concerns the judge granting plaintiffs access to certain internal documents and thus denying Wal-Mart’s claim that such documents were covered by the attorney-client privilege or work product doctrine. The second concerns the judge granting plaintiffs the ability to depose Wal-Mart’s current CEO.
Wal-Mart’s FCPA Scrutiny DID NOT Begin With The April 2012 NY Times Article
If you follow media reporting (and certain FCPA commentators) you probably heard the narrative before: Wal-Mart’s Foreign Corrupt Practices Act began with the April 2012 New York Times article.
However, this is false.
Set forth below is the chronology of Wal-Mart’s FCPA scrutiny – as even reported by the New York Times – and based on other information in the public domain.
Bloomberg Report Suggests $300 Million Wal-Mart FCPA Enforcement Action
Against the backdrop of certain commentators using the “b” word (as in billions), I predicted from the start that Wal-Mart’s Foreign Corrupt Practices Act enforcement action was unlikely to be a top five FCPA settlement amount of all-time.
Bloomberg reports: “Wal-Mart is preparing to pay roughly $300 million to resolve a long-running U.S. investigation into allegations of bribery by its employees, according to people familiar with the matter.”
See here to learn more about FCPAnalytics.
Wal-Mart’s Recent Disclosures
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.
Wal-Mart Five Years Later
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.