Published On: Sun, May 14th, 2017

Wal-Mart close to settling alleged bribery cases in Mexico and elsewhere: sources

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Wal-Mart Stores Inc. is preparing to pay roughly $300 million USD to resolve a long-running U.S. investigation into allegations of bribery by its employees in Mexico and other countries, according to people familiar with the matter.

The deal, which the people told Bloomberg News was being finalized and still could change, would amount to a significant concession by the U.S. government. The Justice Department and Securities and Exchange Commission had sought at least twice that amount as recently as last year as they investigated bribery allegations linked to Wal-Mart’s business in countries including Mexico, China and India. The proposed penalty could be easily absorbed by the world’s largest retailer.

The proposed resolution would require a guilty plea by at least one Wal-Mart subsidiary, said the people, who discussed details of the confidential negotiation on the condition of anonymity.

The parent company wouldn’t be charged, the people said. Instead, they said, it would enter into a non-prosecution agreement with the Justice Department and install an independent monitor to supervise the company’s compliance with the settlement.

Wal-Mart declined to comment. Wal-Mart’s latest annual report didn’t disclose any legal reserve and said the company didn’t expect a settlement to have a material impact on its business. Representatives of the Justice Department and the SEC declined to comment.

Wal-Mart’s shares rose less than 1 percent to close at $76.72 in New York.

A deal with U.S. authorities would end Wal-Mart’s expensive legal troubles stemming from its efforts to expand rapidly abroad a decade ago. It would also allow the company to focus on improving profitability and its e-commerce business.

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Wal-Mart and U.S. authorities were at odds over a settlement as recently as last fall, in the closing days of the Obama administration. With Wal-Mart balking over demands to pay $600 million or more in penalties, prosecutors were going back to gather more evidence from witnesses, people familiar with the matter said in October. Earlier, prosecutors and regulators were pushing for as much as $1 billion, one of the people said.

Mexico Unit

The case gained national prominence through articles in the New York Times detailing alleged bribery and a potential cover-up by high-level executives in Mexico. The reduced figure suggests that the case was difficult to prosecute once federal investigators gathered and scrutinized evidence, the people said.

Much of the alleged misconduct uncovered in Mexico, which has the most Wal-Mart stores outside the U.S., was too old to prosecute, people familiar with the matter have said. Also, most of the behavior under scrutiny involved dozens of small payments to government officials to speed zoning and building permits — not the type of vast corruption involving million-dollar bribes as seen in other industries like mining, drilling and telecommunications, the people said.

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Source: bloomberg.com

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