Walmart de Mexico's Bribery Issue

This article is written using an enlightened self-interest approach. The author describes Wal-Mart behaving in a way that increases its own benefits, with the outcome of their actions being the most important consideration. An example of this is the author’s notion that Wal-Mart’s low prices are due to “the exploitation of its workers” (McLachlan, 2009, pg. 289), “systematic use of ‘maquiladoras’ in conditions of extreme exploitation” (McLachlan, 2009, pg. 289), and Wal-Mart’s threat to move production to China to obtain lower prices. In this article, the author implies that Wal-Mart’s actions demonstrate that they are not concerned with finding the most ethical behaviour; they are merely interested in the action(s) that most closely achieve their goal to remain the “biggest chain of direct sales to the consumer in North America”. (McLachlan, 2009, pg. 289)

However, not all companies succeed to comply with all regulation, even though apparently it looks that all operations are lawful. For instance, United States vs. Kay case, No. 05-20604, 2007 U.S. could lead to broader enforcement actions under the FCPA (“FCPA Gets Broader Reach”). The company President (Douglas Murphy) and Vice President for Caribbean Operations (David Kay) at American Rice, Inc. took several steps in order to reduce sales and taxes costs to rice exported to Haiti. Even though their actions included paying officials to resolve tax issues, underreporting imports to reduce duties and taxes, paying officials to accept the underreporting, the district court granted a motion to dismiss the indictment, holding that the scope of FCPA did not extend to paying foreign officials for the purpose of reducing taxes. In contrast, the court of appeal reversed in United States vs. Kay, holding that bribes paid to foreign officials in consideration for unlawful evasion of sales taxes fall within FCPA. As a result, the jury found Kay and Murphy guilty of violating the FCPA by paying foreign officials to retain their business in Haiti (“FCPA Gets Broader Reach”). Moreover, the court rejected defendants’ argument that its interpretation of the FCPA extended criminal liability under the statute

In recent news, an alleged Sarbanes-Oxley Act violation has been revealed at the United States based corporate giant, Wal-Mart, where executives are accused of engaging in bribing Mexican officials to facilitate corporate growth throughout the country.

Wal-Mart Stores, Inc. Walmart is the biggest importer of foreign products in the United States. For this, Walmart created a code of conduct for its foreign suppliers as “Standards for Suppliers”. To meet this code of conduct foreign supplier need to follow all the local law, rules and regulations of country and the working condition of industry like pay, hiring forced labor, child labor and discrimination. This code of conduct states Walmart may make on-site inspection to the foreign products that is going to be imported in Walmart USA by which it can cancel or reject the low standard product while site inspection. These are included in Walmart’s supply contract with its suppliers in foreign countries. The foreign workers who are importing goods to Walmart from China, Bangladesh, Indonesia, Swaziland and Nicaragua sued Walmart to the US district court alleging that they were third party beneficiaries to the Walmart’s contract to its foreign suppliers that due to the Walmart’s breach of standard they were due damages from Walmart. Their employees violated the standards because of Walmart failed to investigate on working condition of foreign suppliers. Even knowing the standards were being violated Walmart failed to implement the standards mentioned there in contract. The U.S. court held that the litigants were not intended third party beneficiaries to Walmart’s contract to its foreign suppliers and terminated the

By demanding that all associates lead with integrity in the workplace this means fewer problems for employees or customers. Integrity helps to cover issues dealing with bribery, relationships between employees, and financial integrity. Some social benefits to integrity and honesty are that Wal-Mart reports their financial information without trying to disclose their personal information. This also helps Wal-Mart to make better business choices with accurate financial information. Wal-Mart also believes in free and open trade and will not accept any types of bribes in our country or abroad. This ensures that even overseas Wal-Mart is continuing to remain ethical and fair with trade. Wal-Mart complies with all laws both in the United States and out of the country.

Employee can take advantage of this issue and create a legal issues and obstacles against Walmart.

WalMart is known not the biggest retailer on the planet additionally known for low advantages and wages. This is a moral issue that was tended to. It was said that WalMart needed to procure healthier and low maintenance specialists. This was terrible press for WalMart and they needed to do something to enhance their association with worker stakeholder 's.

Approach any random stranger in America and ask them where they can get their groceries, clothes, appliances, and electronics from at a cheap price and they will most likely say Wal-Mart. A pioneer of the “one-stop-shop”, Wal-Mart has evolved from a small, wholesome shopping mart into a world renown corporation. America has not seen a complete domination of the market in this manner, since the mid 1900’s with General Motors. Wal-Mart has revolutionized the American culture of saving money. With all of the successes, there are also many consequences and controversies that flood the corporation’s name, making it also one of the most infamous and negatively viewed businesses in the world. The unethical working conditions, wages, and lack of benefits combine with the undeniable truth of Wal-Mart’s monopoly of the variety store genre has deemed the company “evil” among many Americans. However, there is a reason as to why Wal-Mart is still exponentially growing in net worth every single day. It is the success story that gives millions hope and strive to achieve. People may look down upon Wal-Mart, but it is a great asset to America as it provides jobs for millions of Americans, offers necessities at the lowest price possible, and is the physical embodiment of the American dream.

Wal-Mart Stores, Inc. is the world 's largest retail enterprise, with total revenue of $421.8 billion and a net income of $16.4 billion in 2011. 1 It is also the world 's largest employer, with 2.1 million employees worldwide in 2010 2, not including workers hired by its providers. In my opinion, Wal-Mart provides a clear illustration through which to look at how many multinational companies (MNCs) take part in an illegal and unethical behavior. They use their bargaining power and market control to pressure countries to overlook environmental degradation and violation of national labor laws. They dictate expected pricing for products, particularly through imports from overseas countries. Labor is fulfilled mostly by underage and underpaid employees. In the United States, since 2005, Wal-Mart has paid about $1 billion in damages to U.S. employees in six different cases related to unpaid work. 3 Furthermore, Wal-Mart opposes any form of collective action, even when employees are not seeking unionization, but simply more respect. 4 The fact that Wal-Mart opposes unions exist. The company has a long history of fighting them, to the point of closing stores after employees organize. Managers have been instructed to talk to their teams about why unions are so unwanted in their business. Overseas, the company was involved in a series of scandals, including multiple cases of bribery. In April 2012, The New York Times published a story that

In 1962 in Rogers, AR, a man by the name Sam Walton founded the well-known retail store Wal-Mart, dedicated to make a difference in the lives of their customers by offering everyday low prices. (Walmart, 2014). Despite their effort trying to save people money, Wal-Mart has been caught up in some scandals, which has given the company a bad reputation. In 2005 Wal-Mart paid bribes in Mexico to win market dominance and to speed up building permits. It is said that it is difficult to get all the permits needed to open a business without paying off low-level officials. The former Wal-Mart executive gave names, dates and bribe amounts. He knew a lot, he said it was because he had been the lawyer in charge of obtaining construction permits for Wal-Marts in Mexico, which they refer to as Wal-Mart de Mexico. Wal-Mart sent investigators to Mexico City, where they uncovered evidence of widespread bribery. There was a paper trail of

Unlike Johnson & Johnson, Wal-Mart has not shown a clear and concise message of ‘never again’, but instead have made many moves that just seem calculated. For one, while the Department of Justice has investigated the Wal-Mart bribery case, the company has funded a Chamber of Commerce initiative to roll back certain portions of US bribery laws. In addition, the company has never officially admitted or denied the charges, but instead seemed to hedge its

Wal-Mart would rather bribe factories money to move on and brush it under the carpet instead of taking responsibility for their involvement. So, one would have to think this is not due to the lack of knowledge of the practices in the factories, but the choice to ignore and not care of these practices. In 2012, Wal-Mart choose to “make payments to Mexican officials of more than $24 million noted by The New York Times and in Asia there were 90 reports within a year and half period” (Sethi) to cover situations up demonstrating that money talks.

U.S. Immigration agents raided over sixty stores in 2003 for alleged use of illegal aliens to clean the stores. The janitorial staff was subcontracted by Walmart, however, it was alleged they had knowledge in the subcontractors use of illegal immigrant labor. Walmart settled by paying an $11MM fine in 2005.

Wal-Mart is certainly credited with changing the retail world as we know it with its low prices and big stores with huge selections but it has come at a price. They have struggled with issues that question the ethics as a company and legal issues that question how they manage people. These issues will continue to hurt their organization unless a complete change in management thinking and actions are changed. As a socially responsible organization, their management planning in this area is second to none. Lets hope they take the same effort in improving their image when it comes to ethics and legal issues.

1. What is the ethical dilemma facing Wal-Mart in this case ? Do Wal-Mart’s associates also face an ethical dilemma? If so, what is it ?