The Wal-Mart Mexican bribery scandal has taken new turns that could further implicate the retail giant in a widening corruption probe.
Already facing allegations it violated the Foreign Corrupt Practices Act, which forbids American corporations and their subsidiaries to bribe foreign officials in order to win business contracts, the Washington Post reports that Wal-Mart actively participated in an aggressive lobbying campaign to roll back the very anti-bribery law it allegedly violated in Mexico, and for which it may be prosecuted.
On Monday, the NY Times reported that Wal-Mart had spent the last decade bribing Mexican officials to the tune of $24 million to fuel its rapid-fire growth in that country while granting it special advantages over competing retailers.
In place since 1977, the Foreign Corrupt Practices Act, or FCPA, remained largely beneath the radar until 2007 when the annual number of Department of Justice cases brought against corporations more than doubled and penalties paid out by companies violating the law surged, peaking at nearly $1.8 billion in 2010. (See accompany charts in the slideshow.)
This caught the attention of the U.S. Chamber of Commerce, according to the Wall Street Journal, and the powerful business group began a “full-press lobbying effort” to amend the law.
From October through December of 2011, the Journal reports, the Chamber spent $400,000 on external lobbyists and $5,670,000 on an internal arm, the Institute of Legal Reform, with the FCPA as a primary focus.
The Chamber says the rollback effort is an attempt to clarify the statute and change how it’s enforced, but critics say it’s merely an attempt to gut the law. More cynically, some critics have even snarked that the Chamber is trying to change a law against bribing officials in foreign countries by bribing officials in this country.
What’s Wal-Mart’s connection? The Post says that between 2003 and 2010, the retailer’s corporate secretary and top ethics officer, Thomas Hyde, sat on the 40-member board of the Chamber’s Institute of Legal Reform. Hyde was among the Wal-Mart executives who received initial reports of the bribes in 2005, according to the NY Times.
As a result, there are two investigations underway. The Justice Department, which investigates all alleged violations of FCPA, is investigating Wal-Mart’s alleged bribes to local Mexican officials, and it’s investigating why the retail giant launched but then shut down an internal inquiry while never notifying the Justice Department or the Securities and Exchange Commission of the allegations as required by law.
Meanwhile, two congressmen announced on Wednesday that they will begin their own investigation. Democratic Congressmen Henry Waxman of California and Elijah Cummings of Maryland sent letters to Chamber of Commerce CEO Tom Donohue, and Gregg Steinhafel, chairman of the board of the Retail Industry Leaders Association (and CEO of Target), trade groups the Post says worked with Wal-Mart in lobbying to weaken the FCPA.
Wal-Mart claims it “never lobbied on” attempts to changes the FCPA, and is downplaying its presence on the boards of any trade groups that have, which include the Chamber, the Retail Industry Leaders Association, and the National Foreign Trade Council.
“Simply because Wal-Mart is a member of an organization does not mean we agree with every position they take,” Wal-Mart spokesman David Tovar said.
But just as Congressmen Waxman and Cummings were readying their probe, Wal-Mart enlisted several K Streeters to stave off the investigation:
Wal-Mart’s top D.C. lobbyist, Ivan Zapien, convened a meeting of his outside consultants today. Those who attended, according to a source familiar with the session, included Walmart’s former in-house Democratic lobbyist Kimberly Woodard, who now runs her own shop; GOP heavyweight Charlie Black of Prime Policy Group; Paul Brathwaite of the Podesta Group, and Capitol Counsel’s John Raffaelli and former Rep. Jim McCrery (R-La.).
Paul Brathwaite is a former Democratic staffer who used to work for Cummings while staffing the Congressional Black Caucus. Charlie Black is a senior advisor to Mitt Romney’s presidential campaign.
Analysts say that political support for changing the FCPA was already thin but the Wall Street Journal notes that because of the high-profile nature of the Wal-Mart case, any move to reform the law now has probably been set back for years.