Walmart Settles After FCPA Violations

Walmart and its Brazilian subsidiary settled for $137 million after the Department of Justice said both violated the Foreign Corrupt Practices Act, according to a June 20 press release. The subsidiary, WMT Brasilia S.a.r.l, pleaded guilty to the charges.

The Justice Department cited Walmart’s “rapid international expansions” as directly related to violations of the FCPA, saying subsidiaries in Mexico, India, Brazil and China hired “third-party intermediaries” (TPI) who made “improper payments” to government officials to quickly obtain store permits and licenses. Because of those payments, the press release said, Walmart was able to maximize profits by opening some of its stories faster.

Between 2000 and 2011, Walmart employees were aware of “certain failures” involving the company’s internal accounting controls that safeguarded against FCPA violations, the Justice Department said. Among several violations, the employees failed to ensure that “sufficient anti-corruption-related due diligence was conducted,” “that sufficient anti-corruption-related internal accounting controls concerning payments to TPIs existed” and “that proof was required that TPIs had performed services before Walmart paid them,” the press release said.

Violations occurred in Mexico, India, Brazil, India and China, the Justice Department said, including instances between 2003 and 2011 in which Walmart’s Chinese subsidiary flagged “numerous weaknesses” in internal accounting controls, but many were “not addressed.” Almost all of the subsidiary’s “anti-corruption-related internal controls audit findings” during that time were ignored, the press release said.

“The FBI will hold corporations responsible when they turn a blind eye to corruption," FBI Assistant Director Robert Johnson said in a statement. "If there is evidence of violations of FCPA, we will investigate. No corporation, no matter how large, is above the law."

As part of the settlement, Walmart entered into a three-year non-prosecution agreement, according to the press release, and will “retain” an independent corporate compliance monitor for two years. The Justice Department said Walmart “fully cooperated” with the investigation in Brazil, China and India but did not “timely provide” certain documents and information. The company also did not voluntarily disclose the violations in Mexico, and only disclosed the violations in Brazil, China and India after the U.S. began investigating in Mexico.