Wal-Mart in Mexico: It's Not Getting Better

Back in April, the New York Times published a devastating article by David Barstow about bribery at Wal-Mart de Mexico. And while some Times readers were inclined to give the company a free pass ("This is apparently the method of doing business in Mexico..."), I argued that this argument (a) painted a whole country with a very big brush, and (b) ignored the inconvenient fact that bribery is illegal in both the U.S. and Mexico. The behavior uncovered was, in addition, a complete violation of Wal-Mart's own code of ethics (the first of which is, "Always act with integrity.").

Today's Times has another compelling, worth-reading-in-full story by Barstow and Alejandra Xanic von Bertrab on how Wal-Mart systematically used bribes to get what it wanted and grow its business in Mexico.

The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals. 

The Times investigation found 19 store sites in Mexico where the trail of bribes matched up with a trail of permits. For example: "Thanks to nine bribe payments totaling $765,000, Wal-Mart built a vast refrigerated distribution center in an environmentally fragile flood basin north of Mexico City, in an area where electricity was so scarce that many smaller developers were turned away." Wal-Mart is the largest private employer in Mexico.

According to the article, Wal-Mart de Mexico employees did not themselves deliver bribe payments, but entrusted "fixers" to deliver payoffs:

Wal-Mart de Mexico’s written policies said these fixers could be entrusted with up to $280,000 to “expedite” a single permit. The bribe payments covered the payoffs themselves, a commission for the fixer and taxes. For some permits, it was left to the fixers to figure out who needed to be bribed.  

How much did Bentonville, Arkansas, Wal-Mart's global headquarters know? It's hard to be sure, at least without a full judicial investigation. The Times quotes a Wal-Mart spokesperson as saying, "We are committed to having a strong and effective global anticorruption program everywhere we operate and taking appropriate action for any instance of noncompliance," and notes that the company has spent more than $100 million on investigative costs related to anticorruption training and background checks this year. Given that the company relies on careful financial accounting for its success, I do find it hard to believe that headquarters was unaware.

I wasn't surprised by the revelations back in April, and I'm not surprised now. Disappointed, oh yes.