I recently met a compliance officer for a particular multinational corporation that is currently under investigation for possible FCPA violations. FCPAméricas has been quite critical of this company. I told him that I hoped his colleagues were not offended. He said, no, not at all. His company sees the FCPA investigation as an opportunity.
I thought of this conversation when reading the New York Times article last week entitled, “How Wal-Mart Used Payoffs to Get Its Way in Mexico.” Wal-Mart’s reported activity, if true, was egregious. In May, FCPAméricas discussed this investigation as an “action that hits home.” The latest Times article gives additional details showing why this is. Circumventing zoning laws designed to protect cultural landmarks, subverting democratic governance to gain favor, bypassing regulations designed to protect Mexican citizens from unsafe construction and protect the environment from harm. These are just a few effects of corruption in places like Mexico.
Reports indicate that, in the face of an FCPA investigation, Wal-Mart is now working to turn its compliance program around. It is training third parties. It is requiring partners to sign certifications. But these types of things are all standard components of FCPA compliance. Wal-Mart should instead use the FCPA investigation, and the attention it has generated, as an opportunity. It is an opportunity to go big on compliance.
Take Siemens for example. Subject to the largest anti-corruption monetary settlement in history, Siemens brought to bear its engineering expertise to innovate in compliance. It created a Policy and Control Masterbook integrating over 700 company-wide global controls. It now hosts lawyers and compliance officers of other companies at its operations in emerging markets like Brazil to help educate them on the art and science of compliance. The company is thought of by many as a standard-bearer in the compliance industry.
What could Wal-Mart do to go big on compliance? It could innovate by playing to its strengths. This massive company already uses unmatched precision to identify new locations for its stores, track inventory and sales trends, and manage its supply chain. It could use these same tools to build a state-of-the-art corruption risk-tracking program to which its compliance practices could respond in real time. It could use its enormous leverage in international markets to educate foreign audiences on compliance. For example, the fact that Wal-Mart is starting to obtain anti-corruption certifications from its landlords in India is already attracting attention there. Imagine the message Wal-Mart would send if it went further to actually train these landlords on compliance? What if it required landlords to put compliance programs in place themselves? Maybe it could use the high visibility placement of its stores throughout Mexico to begin to teach communities how to identify and avoid risks of petty corruption? It could partner with local municipalities to launch reporting centers in its Supercenters.
It is still unclear whether Wal-Mart will choose to be so aggressive. On one hand, it has named an experienced compliance officer, Daniel Trujillo, as its CCO. Mr. Trujillo offers years of experience in managing corruption risks in the oil and gas services sector. On the other, it is said that the CCO still reports to the general counsel and not to the board itself. This causes one to question the company’s true commitment to giving compliance within the company the statute it deserves.
Wal-Mart has the spotlight. Time will tell if it chooses to use it.
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© 2013 Matteson Ellis Law, PLLC
Post authored by Matt Ellis, FCPAméricas Founder & Editor