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.

Fines vs. Fees

Whatever fine Wal-Mart eventually receives, it probably won’t compare to the fees Wal-Mart has paid out in connection with the investigation and compliance.

In the first quarter, Wal-Mart spent $73 million on matters tied to its internal investigation, according to company filings.

“Approximately $44 million of the expenses represent costs incurred from the ongoing inquiries and investigations, while $29 million covers costs regarding the global compliance review, program enhancements and organizational changes,” Jeff Davis, Wal-Mart’s executive vice president of finance and treasurer, said in a May 16 earnings call, a transcript of which was posted on the company’s website.

Wal-Mart said it expects to spend between $65 million and $70 million in the second quarter for FCPA compliance expenses. That’s on top of the $157 million it shelled out during its last fiscal year, which ended Jan. 31, in connection with investigations into possible violations of the FCPA.

If Wal-Mart does reach a settlement with the government, which would probably be in the form of a deferred prosecution agreement, it would more than likely involve an agreement to have a compliance monitor, said Koehler, editor of the legal blog FCPA Professor.

“Compliance officer sounds like one person, but it’s normally an army of people,” he said. “And it’s not uncommon for monitor actions to easily reach $10 million a year.”

In the deferred prosecution agreements, the companies typically never admit nor deny that they did anything wrong either, said Mokhiber, the editor of the Crime Reporter.

“And then they violate it again, and they get another deal,” he said. “So there’s very little possibility for civil contempt charges against the company for violating the original consent order.”



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