House, DOJ probe Walmart bribery scandal

• Tweet

WASHINGTON, April 24 (UPI) -- Two top House Democrats announced probes into claims Walmart's Mexican subsidiary paid more than $24 million in bribes to speed permits for new-store openings.

The announcement by Reps. Elijah Cummings, D-Md., and Henry Waxman, D-Calif., came as The Washington Post reported the U.S. Justice Department was conducting a criminal probe of Walmart in the allegations of systemic bribery.

Shares of Walmart Stores Inc. fell nearly 5 percent, or about $10 billion in market value, on the New York Stock Exchange Monday. Shares of Walmart de Mexico SAB de CV, known colloquially as Walmex, tumbled 12 percent on the Mexican Stock Exchange.

The New York Times reported Sunday Walmart internal investigators found credible evidence Walmart de Mexico paid the bribes to support expansion in Mexico, where one in five of the retailer's stores are located.

The idea was to build hundreds of new stores so fast that rivals, against which Walmex competes fiercely, would not have time to react, former Walmex Chief Executive Officer Eduardo Castro-Wright told the Times.

Told of this in 2005, top executives in Bentonville, Ark., shut down the internal investigation, the Times reported.

Cummings and Waxman, the top Democrats, respectively, on the House Oversight and Government Reform and House Energy and Commerce committees, said they wanted in-person meetings with Walmart officials, including Chief Executive Officer Michael Duke, this week to address the allegations.

Walmart, which said during the weekend it was investigating the charges -- which it pointed out were seven years old -- had no immediate comment on the investigation.

Spokesmen for House Oversight Committee Chairman Darrell Issa, R-Calif., and House Energy and Commerce Committee Chairman Fred Upton, R-Mich., had no immediate comment.

The Justice Department criminal probe was launched in December 2011 after Walmart met voluntarily with department officials to say it was looking into the allegations, the Post said.

The Justice Department declined to comment.

Walmart said this weekend it met with the U.S. Securities and Exchange Commission, responsible for enforcing the U.S. securities laws and regulating U.S. stock exchanges.

The U.S. Foreign Corrupt Practices Act bans companies from paying foreign officials to get more business.

The Post said the law was recently targeted by lobbyists -- including an arm of the U.S. Chamber of Commerce tied to Walmart executives -- who criticize the 1977 act as too broad and bad for business.

The chamber's Institute for Legal Reform, a leader in criticizing the law, listed Walmart Executive Vice President and General Counsel Jeff Gearhart and former Walmart Executive Vice President and Corporate Secretary Thomas Hyde as board members on its 2010 tax form, the Post said.

Hyde left Walmart that year.

Walmex opened 95 Mexican stores of various types, including restaurants and supermarkets, in 2005 -- a record number of store additions for the company at the time.

Walmex opened 365 outlets last year.

As of this year the company is Mexico's largest private employer, with 209,000 employees, operating 2,037 retail outlets under six different names including Walmart and Sam's Club.