Wal-Mart Spends $230 Million on Mexican Bribery Investigation

by Mark Friedman  on Monday, Jun. 10, 2013 12:00 am  

This is one of Wal-Mart’s locations in Mexico, where the company has come under scrutiny for allegedly paying more than $24 million in bribes so stores could open faster.

The DOJ said on its website that it takes into account when determining a punishment whether the corporation made “a voluntary and timely disclosure” and its willingness to provide information and evidence in a case of wrongdoing.

In addition, the company can complete an investigation in an FCPA case faster than the government.

“In an FCPA investigation more likely than not all of the relevant documents, evidence and witnesses are located in foreign countries,” Koehler said. “When the DOJ and the SEC go looking for evidence in foreign countries, they are, with good reason, subject to a whole host of legal impediments and roadblocks.”

If the DOJ gets wind of an alleged criminal activity, however, it will inform the company, said Daniel Richman, a professor of law at Columbia Law School in New York and a former Assistant U.S. Attorney in New York.

“They won’t demand that the firm hire a particular outside counsel, but the firm will know it has to,” he said. “I mean we’re dealing with very sophisticated players here. … And [it] will be a very good signal that the company’s trying to cooperate with the government.”

While the government is interested in what happened in the past, the internal investigation also will show whether the company’s internal controls were ineffective and need to be changed to prevent a violation from recurring, Koehler said.

Avoiding Conflicts

When a company hires a law firm to police itself, questions are raised about conflict of interest.

“A conflict of interest is inherent in any internal inquiry, but measures can be, and usually are, taken to mitigate the conflict,” Richman said.

The internal investigation is usually led under the direction of independent board members, Richman said. In Wal-Mart’s case, the Audit Committee of its board of directors is conducting the investigation.

Another corporate strategy is to hire a firm that has a reputation for conducting extensive and complete investigations with integrity, Richman said. “And that’s why you’ll often find these investigations are conducted by former prosecutors who have a degree of credibility with the government,” he said.

In 2012, Wal-Mart named Tom Gean, who has worked for the company since 2004 and was a former U.S. Attorney, as its global FCPA compliance officer. It also hired the law firm of Jones Day of Washington, D.C., which has offices around the world and a team of 2,400 attorneys, to handle the internal investigation. A spokesman for Jones Day didn’t return a call for comment.



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