Bribery at Wal-Mart de Mexico

Just when things seemed to be going so well at Wal-Mart!

Six years ago, just after I started blogging, I made a happy prediction about Wal-Mart. The company was subject to a truly enormous amount of bad press at the time, accused of everything from environmental infractions to falsifying employee time-cards. Nonetheless, I predicted that “within 5 years, Wal-Mart will be at the top of at least some business ethics / corporate social responsibility / corporate citizenship rankings.” I don’t think it was a particularly brave prediction: Wal-Mart has the money, and the organizational efficiency, to do just about anything it turns its mind to. And most of the bad things the company was being accused of weren’t central to its business model, so there didn’t seem to be any major barriers to the company turning over a new leaf in response to massive public pressure.

And my prediction turned out to be roughly right. While certainly not free of criticism, Wal-Mart has turned into an icon of environmental sustainability, and has indeed won a number of ethics-related awards. The bad press had dropped to virtually zero.

And then this.

If you haven’t yet read the stunning exposé on bribery at Wal-Mart de Mexico, you should. The short version: Wal-Mart de Mexico was apparently involved in an organized campaign to use bribery as an aid to its ambitious plans for expansion. When insiders notified Wal-Mart head office in Bentonville, Ark., of what was going on — the corruption, the devil-may-care attitude to law-breaking, the risk to corporate reputation — the big fish there basically swept the problem under the rug.

It’s a damning story, one that has vast implications all the way to the very top of the company’s world-wide operations. All kinds of questions arise. Where was the Board? What does this say about ‘tone at the top’? What role was played by international differences in law and custom? What damage will this do to Wal-Mart’s attempt to rehabilitate its reputation? What does this scandal say about the management skills of top executives at Wal-Mart de Mexico? Should heads roll? Or, more likely, whose heads should roll? To what extent does this pull the rug out from under the company’s sustainability and CSR efforts? I’ll explore a few of those questions here in the coming days.

5 comments so far

  1. Pete Bresnahan on

    Chris, I am looking forward to your comments on this matter. My experience of witnessing how business is done in Central America can be best encapsulated with the old adage ‘When in Roman do as the Romans do.’ This is an unfortunate ‘mindset’ but I have seen this attitude in action from virtually every echelon of some–not all–corporate hierarchies.

  2. Pete Bresnahan on

    opps…’When in Rome, do as the Romans do…..’

  3. Constant Geographer on

    A major concern about doing business in non-Western World cultures, in which I am including the United States and Canada, is the prevalence of bribery. Bribery is an institution nearly across the board in every country outside of Western Europe and the United States/Canada. Mexico, Brazil, Russia, China, India, throughout the Middle East and Africa. Bribery can stall economic development, stop economic development if “ethical” companies or countries are concerned, or push development into the hands of less “ethical” players, i.e. China, or Russia. I’m not surprised by these revelations. Chiquita paid $25 million in fines to Colombia for paying FARC rebels to guard fruit plantation and ensure safe travel for employees. We in North America, or Western Europe may frown at these transactions, but how many other companies are out there, right now tabulating their bribes, and wondering if a phone call to the FBI might be in order? Or, are they sitting by, waiting to see how Wal-mart plays this, the “cost of doing business in Latin America?”

    • Chris MacDonald on

      I’ll be blogging specifically about bribery tomorrow. Bribery is common in the places you mention, but also illegal. And, importantly, it is socially corrosive and detrimental to an economy. There simply is no pro-bribery argument. I think resisting the temptation to engage in bribery is a very important litmus test for a company.

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