Wal-Mart shaken by bribery probe, shares plunge
Reebok New York Jets jersey wholesale Wal-Mart Stores Inc lost $10 billion of its market value on Monday on concerns that a bribery investigation in Mexico could be very costly and hinder its plans to grow.
In a sign that the problem was widening for the world's largest retailer, two U.S. lawmakers said they were launching their own investigation into allegations in a New York Times article that Wal-Mart de Mexico had engaged in a multi-year campaign of bribery to build its business. In Mexico, the front-running presidential candidate, Enrique Pena Nieto, and lawmakers also called on local authorities to investigate.
If the allegations are true, Wal-Mart may have violated the U.S. Foreign Corrupt Practices Act (FCPA), which forbids bribes to foreign government officials, as well as run afoul of Sarbanes-Oxley rules that require corporate gatekeepers to report material violations of securities laws.
Legal and retail experts also raised concerns about Wal-Mart Chief Executive Mike Duke and former CEO Lee Scott, who were among senior executives allegedly aware of the situation, according to the Times. Scott still sits on the company's board.
Two Democratic U.S. lawmakers, nfl nike jerseys cheap Elijah Cummings and Henry Waxman, said they were launching an investigation into the matter and sent a letter to Duke requesting a meeting.
The Times report "raises significant questions about the actions of top company officials in the United States who reportedly tried to disregard substantial evidence of abuse," Cummings and Waxman said in a statement.
Shares of Wal-Mart de Mexico, which is 69 percent-owned by Wal-Mart and known as Walmex, fell 12 percent to 37.89 pesos ($2.88). The drop wiped out a 12 percent year-to-date gain in the second-most-weighted stock on Mexico's IPC index.
Shares of Wal-Mart fell 4.7 percent to $59.54, wiping some $10 billion off their market value and more than erasing this year's gains. The stock is a component of the Dow Jones industrials index, which ended 0.8 percent lower.
The news raised concerns that Wal-Mart, NCAA jerseys /football jerseys the world's largest retailer, may have trouble expanding into new markets.
"Entering additional countries is a cornerstone of Wal-Mart's growth strategy," Consumer Edge Research analyst Faye Landes wrote in a research note. "We can foresee the authorities in some key countries, notably India, becoming dramatically less welcoming to Wal-Mart following the release of the allegations."
The New York Times reported on Saturday that a senior Wal-Mart lawyer received an email from a former Walmex executive in September 2005 that described how the Mexican company had paid bribes to obtain permits to build stores in the country.
According to the Times, Wal-Mart sent investigators to Mexico City and found a paper trail of suspect payments totaling more than $24 million. But the company's leaders shut down the probe and did not notify U.S. or Mexican law enforcement officials until after the newspaper informed Wal-Mart that it was looking into the issue, the Times reported.
Wal-Mart said it was deeply concerned about the matter and began an investigation into its FCPA compliance last fall. It said it disclosed the probe to the U.S. Department of Justice and the Securities and Exchange Commission, and declined to give any more details or to make executives available for comment.
In a memo entitled "Integrity" sent to Wal-Mart employees on Monday, Duke said the company takes compliance with FCPA "very seriously, MLB Boston Red Sox jersey and we will not tolerate violations anywhere or at any level of the company." The memo included a link to Wal-Mart's global ethics office website and phone hotline.
"My firm expectation is that Walmart will always follow the law, but my expectation also goes far beyond following the law. We will do what's right - not just what is legal - and our actions will show the utmost integrity at all times," he said.
