FCPAméricas Blog

Wal-Mart, Go Big on FCPA Compliance

Author: Matteson Ellis

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.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2013 Matteson Ellis Law, PLLC

Matt Ellis

Post authored by Matt Ellis, FCPAméricas Founder & Editor

Categories: Anti-Corruption Compliance, Enforcement, FCPA, Mexico, Wal-Mart

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3 Responses to “Wal-Mart, Go Big on FCPA Compliance”

  1. Rolls-Royce Brings in Lord Gold – Is it Thinking Big Enough? « FCPA Compliance and Ethics Blog Says:

    […] thought about this move by Rolls-Royce when I re-read a posting, entitled, “Wal-Mart, Go Big on FCPA Compliance”, by my colleague Matt Ellis, in his blog, FCPAméricas. In this post he detailed some of the […]

  2. Don’t Butt-Slide into Second Base: Be a Better Company | FCPA Compliance and Ethics Blog Says:

    […] December Matt Ellis wrote a great piece on his blog site, FCPAméricas, entitled “Wal-Mart, Go Big on FCPA Compliance”, where he challenged the company to innovate in compliance “by playing to its strengths.”  […]

  3. Wal-Mart: Be a Leader in Compliance | FCPA Compliance and Ethics Blog Says:

    […] differed from that of Matt Ellis, who last December, in a blog post on FCPAméricas entitled “Wal-Mart, Go Big on FCPA Compliance”, urged the company to “innovate by playing to its strengths.” These strengths include both […]

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