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Today's Top News
Walmart: The Stench of Bentonville Spreads to Mexico -- and Back
Wal-mart has long boasted of its "Always Low Prices," but now it has confirmed that it also has "Always low morals."
The bottom line has always been THE line for Wal-mart executives, and sinking to the ethical bottom to enhance that line has not only been tolerated, but legitimized as a proven path to executive promotion and riches. Squeezing suppliers, crushing competitors, exploiting employees, using enslaved workers in foreign factories and resorting to other brutish tactics to pound out another dollar in profit are central components of Wal-mart's management ethos and business plan.
Now, we can add bribery to the list of accepted practices — so accepted that even getting caught at it doesn't mean you get fired.
Walmart de Mexico is now the largest retailer and employer in that country, an exalted status that it gained the old-fashioned way: by doling out millions of dollars in corporate bribes. With sluggish sales and a tarnished brand in the U.S., the retailing giant has been pushing hard to expand internationally, and in amazingly short time, its Mexican branch became huge, with one out of five Walmart stores presently located there.
All it took, we now learn from an excellent investigative report by The New York Times, was the systematic spreading of muchos, muchos pesos to government officials across the country to gain needed permits quickly, dodge environmental restrictions and generally have the company's path cleared for market domination.
Not only is this wrong, it is seriously criminal — a blatant violation of our Foreign Corrupt Practices Act. And, lest you think the corruption was the work of some lower-level manager gone rogue, the knowledge of this wholesale bribery scheme goes all the way to the top, including the current and one former CEO.
David Tovar, a Wal-mart PR agent, was rushed out as the scandal was gaining media coverage to assert, disingenuously, "We are committed to getting to the bottom of this matter." Too late, sir.
Wal-mart already reached bottom.
Apparently, though, a skunk doesn't smell its own stink — or at least it's not offended by it.
Thus Wal-mart honchos are addressing the nauseating stench of this still-evolving bribery scandal as though it's coming from somewhere else.
"We are deeply concerned by these allegations," declared PR man Tovar, "and are working aggressively to determine what happened."
Well, gosh, you could just walk aggressively over to the executive suite and ask CEO Mike Duke, board member Lee Scott and vice chairman Eduardo Castro-Wright. All three have first-hand knowledge of what happened, for they were butt-deep in it. You see, while Wal-mart's massive bribery payments took place in Mexico, the corruption emanated from the very top of corporate headquarters in Bentonville, Ark.
It stems directly from Wal-mart's ruling ethic of grabbing market share and profits at all costs, pressuring managers to achieve "very aggressive growth goals" by doing "whatever was necessary." A decade ago, when Castro-Wright became head of Wal-Mart operations in Mexico, he decided that "necessary" included unbridled bribery. As early as 2005, this was known by the corporate chieftains in Bentonville, including then-CEO Scott. Also, Duke, who oversaw all international divisions at the time, was told in 2005 about corrupt payouts, which eventually totaled some $24 million.
So, did Scott and Duke rebuke the perpetrator? No. Instead, Scott rebuked those who'd brought the illegalities to his attention, chiding them for being too aggressive.
Fearing that exposure could hurt Wal-mart's stock price, he killed the internal investigation by turning it over to — guess who? — Castro-Wright. Yes, the very same man pushing the bribery scheme! The bribes continued, and in 2008, Castro-Wright was promoted to vice chairman of the corporation. Scott has since retired with a golden pension and a multimillion-dollar fortune, and Duke was elevated to CEO, now drawing $18 million in pay.
It's all part of Wal-mart's business model — and it's stinkier than a whole den of skunks could possibly be.