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Violation of SOX

The document discusses a bribery scheme at Walmart de Mexico where executives paid officials to speed up permits and ignore laws. An investigation found evidence of $24 million in suspect payments approved by top Walmex executives. However, Walmart executives covered up the information and allowed the implicated general counsel to exonerate himself. The cover up violated the Sarbanes-Oxley act which aims to prevent companies from defrauding investors.

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77 views1 page

Violation of SOX

The document discusses a bribery scheme at Walmart de Mexico where executives paid officials to speed up permits and ignore laws. An investigation found evidence of $24 million in suspect payments approved by top Walmex executives. However, Walmart executives covered up the information and allowed the implicated general counsel to exonerate himself. The cover up violated the Sarbanes-Oxley act which aims to prevent companies from defrauding investors.

Uploaded by

Angelo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Angelo James W.

Millora BSAC – AAH


W: 12 – 3 9.4.19

Walmart’s Sarbanes-Oxley problem

An article by: Alison Frankel

What happened?

In 2005, a former commercial real estate executive at Walmart de Mexico (Walmex) blew the whistle on
a massive bribery scheme that fueled the company's explosive growth in the Central American country by
paying officials to speed up permits and ignore laws. Walmart dispatched its own investigators, who
found evidence of more than $24 million in suspect payments, approved by Walmex's top executives but
hidden from the Bentonville, Ark., home office. Presented with this evidence, Walmart buried the
information, allowing the implicated Walmex general counsel to wrap up the inquiry and exonerate
himself and his fellow executives.

The bribery allegations originated with a Wal-Mart lawyer in Mexico, who told Wal-Mart International’s
general counsel, Maritza Munich, about the “irregularities.” She authorized a preliminary investigation by
outside counsel in Mexico, then — quite appropriately — reported the findings to Wal-Mart’s then-
general counsel, Thomas Mars, among other senior officials. Mars brought in Willkie Farr & Gallagher,
which proposed that it conduct a far-reaching internal investigation.

Rather than hiring Willkie for legalities, Mars allegedly sent the Mexico bribery probe back to the
company’s internal investigations unit. According to the Times, investigators turned up unsettling
evidence implicating both a quick Walmart de Mexico executive and Walmart de Mexico’s general
counsel in the bribery and accounting cover-up.

According to the Times, the then-CEO, Lee Scott, called a meeting in February 2006 to decide what to
do. Mars was among one of the senior executives who decided to transfer the bribery investigation to the
very same Walmart de Mexico general counsel who had been implicated in the case.

The intentional cover up of bribery by the top executives violates such terms included in the Sarbanes-
Oxley act, what the aforementioned people have done are the very sole reason why the act should be
reinforced even outside the U.S. proper. It stands as a guide so that company cannot carelessly defraud
their investors, more so everyone other than investors.

Sources:

https://www.reuters.com/article/us-frankel-walmart/wal-marts-sarbanes-oxley-problem-alison-frankel-
idUSBRE83M1GQ20120423

https://theweek.com/articles/476206/walmarts-explosive-mexican-bribery-scandal-concise-guide

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