As a global retailer with net sales of $443.9 billion in fiscal 2012, crises come with the territory for Wal-Mart. Over the years it's endured controversies over employee pay and benefits, the environmental impact of its stores and its treatment of workers overseas.
However, in April 2012, what may be the mother of all Wal-Mart scandals broke: the New York Times reported on alleged corruption as Wal-Mart moved into the potentially lucrative market of Mexico.
Today the Times devoted more than three full pages, including page one, to follow up on the original story. The comprehensive interviews with people involved in the bribery of Mexican officials to get necessary zoning changes and building permits are damning. If true, hundreds of thousands of dollars were passed along to Mexican officials to skirt laws.
The Times article reports that the Justice Department and SEC are investigating violations of the Foreign Corruption Practices Act, and shareholder lawsuits are cropping up over the Mexican corruption allegations.
So the heat is on. How will Wal-Mart respond to this investigative article, and does it even need to? One answer is in the article itself. "We are committed to having a strong and effective global anti-corruption program everywhere we operate and taking appropriate action for any instance of noncompliance," said Wal-Mart spokesperson David W. Tovar in the article.
The company has also reopened its own investigation of the corruption in Mexico it had shuttered in 2006, reportedly spending more than $100 million on investigative costs in 2012. But as the Justice Department and SEC findings are revealed in the coming months, the company will need to be more forthcoming in its responses, among which may be a shakeup of top leadership.
However, it would probably take more than an international scandal to affect the company's bottom line. Interbrand named Wal-Mart as its 2012 best retail brand. U.S. customers who are used to its low prices might not care about what is happening south of the border. In the past, Wal-Mart has been able to endure and actually prosper through a multitude of controversies.
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