Global retail giant Walmart, which is facing uproar in India over its lobbying efforts and allegations of bribery, has come under increased scrutiny after a US media report said that its Mexico affiliate bribed local officials to open stores in desired locations.
According to a New York Times investigation, Walmart 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, Walmart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited,” the publication said.
Walmart’s Mexico affiliate used bribes to subvert democratic governance public votes, open debates, transparent procedures as well as to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It also used bribes to outflank rivals, the report said.
The report comes amid Opposition in India over Walmart’s lobbying efforts to enter the Indian market as well as allegations of bribery. The US justice department and the securities and exchange commission are conducting their own investigation of Walmart of possible violations of the Foreign Corrupt Practices Act, a federal law that prohibits American corporations or their subsidiaries to bribe foreign officials.
According to the Times report, Walmart Mexico was eyeing a location near Mexico’s ancient ruins in Teotihuacan, north of Mexico City to open a store. However, zoning requirements were coming in the way of Walmart to open the store at this location.
But at the headquarters of Walmart de Mexico, executives were not about to be thwarted by the unfavourable zoning decision. Walmart executives paid a USD 52,000 bribe to an official to change the zoning map to allow Walmart’s store.
Walmart de Mexico broke ground on the location in 2004 amid fierce Opposition by protesters who did not want a Walmart so close to a cultural spot.
The Times accessed confidential Walmart documents which identified 19 store sites across Mexico that were the target of Walmart de Mexico’s bribes.
Matching information about specific bribes against permit records for each site, the Times found that dates of bribe payments coincided with dates when critical permits were issued. The report said that bribes totalling USD 341,000 were paid on eight instances, including on one occasion to build a Sam’s Club in one of Mexico City’s most densely populated neighbourhoods near the Basilica de Guadalupe without a construction license, an environmental permit or even a traffic permit.