Wal-Mart spent $24 million in bribes in Mexico and the man who is now CEO knew about it, according to today’s Times. I believe this means that Wal-Mart is in trouble.
I remember traveling with family in Mexico when my Mexican grandfather was still alive, probably about 20 years ago. In his day, you had to cross the palm of even street cops or immigration officials if you wanted something, so my uncles had to stop him from paying bribes to Mexican customs, explaining that those days were over. I guess all that’s really changed is that inefficient retail bribery has been supplanted by the more efficient wholesale variety.
Baud
New GOP policy push: Repeal the socialist FCPA.
Gypsy howell
How absurd is it that bribing foreign officials is against US law but bribing our own officials is not only perfectly legal, it’s
completely integral to our enitire legislative and electoral process.
Baud
@Gypsy howell: It’s not legal. Stop the hyperbole.
cathyx
@Baud: No, but in this country we call it making a large campaign contribution.
KJ
We have a FCPA clean up on aisle 7.
Gypsy howell
@Baud:
Say what? Only an idiot still believes that campaign contributions and the like aren’t forms of legalized bribery.
Baud
@Gypsy howell: Only an idiot believes bribery and providing support to a candidate to gain influence are the same thing. That two things may be wrong doesn’t make them the same. You stated that what Walmart is accused of doing in Mexico would be legal here. I said you were wrong. That is all.
MattF
@Gypsy howell: Perhaps, but it’s hardly news. Jesse Unruh, ’60’s California Democrat:
On campaign contributions – “Money is the mother’s milk of politics.”
On lobbyists – “If you can’t eat their food, drink their booze, screw their women and then vote against them, you have no business being up here.”
gaz
Non-story, and so fucking what?
Bribes are how mexico operates – a lot of other countries do too. Starbucks spread bribe money around in Russia as well, IIRC.
You may not like it, but walmart isn’t exactly playing by new rules here. This is how shit works. If any of you are shocked at all, I just have to say – you need to get out more.
Shari
@gaz:
After the Lockheed bribery scandals of the 1970s, Congress passed a law in 1977 prohibiting US corps from bribing foreign officials/governments. Whether you believe this is “how shit works”, it is illegal.
samara morgan
i knew it.
Mix came from a polygamy commune in mexico just like bishop willard did.
Tissue Thin Pseudonym (JMN)
@Shari: More than that, FCPA prosecutions are a big deal. It’s one of the places where executives can be held criminally liable.
Besides, there was another nugget buried in there, the importance of which I don’t think the writer appreciated. Apparently, WalMart made a filing with the SEC stating that it had conducted an investigation and concluded that there wasn’t anything going on that would materially affect the stock price. Given what was actually going on, that could also bit them in the ass.
dr. bloor
“In trouble” in a relative sense, I’d guess. What are the odds that the fines they pay exceed the amount they laid out in bribes?
gaz
@Shari: No actually it’s not. They just don’t call it a bribe. I’ll be back after I’ve googled this and found out a few specifics.
I have, however, worked for an agency that was openly and actively engaged in bribing foreign officials when they needed to get shit done. IT WAS IN THE FUCKING EMPLOYEE HANDBOOK.
And it was a MAJOR COMPANY. I’ll be back in a few, with some details.
lol
So what you’re saying is Obama is going persecute one of the Job Creator Ultra Class?
Thanks for nothing Fartbama!
Shari
@Tissue Thin Pseudonym (JMN):
Didn’t realize that. Thanks.
A little bit of googling found the fcpa blog where they track news about fcpa offenses.
BigWoodenSpoon
So if WalMart is a corporation, and corporations are people, we can throw WalMart in jail?
gaz
Okay, it looks like it can still be done by bribing through a satellite organization that’s not under the umbrella of US law.
This paper alludes to it, but since i suppose bribing is a dirty word, they don’t actually come out and say it.
tcc.export.gov/wcm/groups/marketresearch/@tcc/documents/briberyreport/exp_005907.pdf
And the major company I worked for above was Tesoro Corp.
And you can bet your ass they bribe foreign officials.
___ also pay close attention to the final clause below:
Basic Statement of the Offense
Section 70.2(1) of the Criminal Code, “Bribery of a Foreign Public Official,” provides that a person
is guilty of an offense if:
(a) the person: (i) provides a benefit to another person; or (ii) causes a benefit to be provided to
another person; or (iii) offers to provide, or promises to provide, a benefit to another person; or (iv)
causes an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made
to another person; and
(b) the benefit is not legitimately due to the other person; and
(c) the first-mentioned person does so with the intention of influencing a foreign public official
(who may be the other person) in the exercise of the official’s duties as a foreign public official in
order to: (i) obtain or retain business; or (ii) obtain or retain a business advantage that is not legitimately due to the recipient, or intended recipient, of the business advantage (who may be
the first-mentioned person).
Under Section 70.2(2), in determining whether a benefit or a business advantage is “not
legitimately due,” the following are to be disregarded:
(a) the fact that the benefit/business advantage may be customary, or perceived to be customary,
in the situation;
(b) the value of the benefit/business advantage;
(c) any official tolerance of the benefit/business advantage.
The amendments contain exceptions for payments that are lawful in the foreign public official’s
country (Section 70.3) and for facilitation payments made “for the sole or dominant purpose of
expediting or securing the performance of a routine government action of a minor nature.”
gaz
and now I remember the euphemism that Tesoro used in their handbook. Eureka. Facilitation payments. =)
burnspbesq
@dr. bloor:
News flash: people get thrown in jail for violating the FCPA. if you’re an ambitious AUSA who wants to get out of Little Rock, this case is your ticket to partnership in a big firm in Dallas.
MattF
@gaz: Hm. So, the story is that Wal-Mart couldn’t be bothered to figure out how to do ‘facilitation’ legally? WTF?
gaz
@MattF: Yes, apparently. Keep in mind, I didn’t write the law that way. I’m just telling it how it is. I’ve attempted to provide links, and augmented it with my own anecdotal experience (which you can take or leave, doesn’t change the link)
Have you noticed anything I’ve missed? I’ll correct that, if so.
Baud
@gaz: That last clause in human speak: We don’t want to bother with the small stuff.
gaz
@Baud: The last clause says (and burnsie can correct this if he wants, IANAL):
If you can make an argument that a payment was needed to
1. Influence a foreign government agency to take a “minor” action that they should be required to do anyway.
2. Or make said government action be taken more quickly.
They don’t define “minor” in the paper, at least that I saw. Nor do they really flesh out what they mean by expedite.
The 2 points above are based on my rough, but best effort interpretation – again, IANAL
MattF
@gaz: Looks to me like the nut here is the ‘not legitimately due’ clause. If you’re making a payment merely to ‘encourage’ an official to do their job properly…
Added: IANAL
dr. bloor
@burnspbesq:
Granted, but I’d rather have something that materially hits their bottom line or doesn’t vanish from public consciousness the first time they run a 10-gallons-for-29-cents sale on Vlasic pickles.
Baud
@gaz: The chief argument I’ve heard against the FCPA is that no other country has a similar anti-bribery law that applies to their companies’ oversees operations, so the FCPA puts U.S. business at a disadvantage against foreign competitors in oversees markets. I’m guessing the exception for “facilitation payments” was meant as a concession to business with respect to the minor stuff.
gaz
@Baud: Even shorter:
The intent is this:
You can pay off a foreign official, if what you want is for them to do something that is already legal (in that country). Or if you need them to do it faster.
You cannot bribe a foreign official to get extra-legal privileges or consideration by said country.
Especially in places like mexico, bribing someone to make them do their job is par for the course.
burnspbesq
In all likelihood, this case will play out similarly to UBS, and KPMG, and Hilfiger.
The company will negotiate a deferred prosecution agreement, pursuant to which it will pay a whopping “fine” (the payment will be called something else, e.g., in the Hilfiger case the company agreed to file amended income tax returns and there was a clear understanding about what would be reported on those amended returns), institute needed reforms (KPMG had to hire a former U.S. District Judge as its in-house ethics czar), and (this is crucial) agree to waive the attorney-client privilege with respect to the results of its internal investigation.
The results of the internal investigation will almost certainly be enough to ensure the indictment of a bunch of director-level people who were involved. Once those people are indicted, Wal-Mart will stop paying their legal fees, and they will be forced to make unfavorable plea deals. Some of them will go to jail.
becca
The bigger issue is that WalMart covered up their own investigation several years ago and promoted the chief bribster. Also, there could be repercussions for the Walton Family banking enterprise in Mexico, which operates free of regulations- a perc not enjoyed by Mexico’s own banks.
burnspbesq
@dr. bloor:
Maybe yes, maybe no. See comment 29.
gaz
@Baud: Probably. My point isn’t to argue against the law. I agree with the law. It’s probably a bad thing to let companies just bribe foreign governments – competition be damned.
But on the other hand, it’s been my experience that companies seem to regularly dance around the edges of this law, and bribe people all the time.
I’d also be inclined to argue that given my interpretation of the exceptions, they’re actually even kind of fair, and probably necessary to do business in certain parts of the world – mexico being a perfect example.
gaz
@MattF: That’s how I read it, too. I think people that write up stuff on the Wal-Mart bribery scandal should do their readers the service of outlining some areas where this stuff was patently extra-legal. I’ll look for myself, eventually. But taken at face value, this FP post only really hints at a scandal. There’s no meat to it, at least in the above post. I’d like to know WHAT, specifically, they are accused of doing. A few details would be nice.
burnspbesq
OT: we throw the word “miracle” around pretty lightly these days, but the fact that this guy is giving interviews certainly qualifies.
espn.go.com/sports/soccer/story/_/id/7842106/bolton-fabrice-muamba-recounts-blackness-cardiac-arrest
Corner Stone
@MattF:
I have hated this quote with the fire of a thousand suns for longer than I can remember.
Corner Stone
I would be very interested to read an official employee handbook that institutionalized facilitation payments aka bribes.
For any company doing cross border work that is practically death itself. The amount of legal and financial reporting needed to stay on the right side of the various regulatory entities is immense.
burnspbesq
@Corner Stone:
Really? What do you have against legislators who actually serve the interests of the voters who put them in office? Are you one of those people who believes that the definition of “honest politician” is “once bought, stays bought?”
Corner Stone
@burnspbesq: Mainly because it’s complete bullshit. And yes, bought politicians don’t stay politicians for very long when they cross their patron.
gaz
@Corner Stone: Go get a job at tesoro corporate. If nothing else, jockey a register at a USA Mart in california. Warning, Tesoro branded gas stations are not actually run by tesoro corporate.
But if you actually work for Tesoro Corporate:
1. Everyone gets the same handbook
2. Everyone is required to read it.
3. They have at least one page describing these Facilitation Payments. I honestly don’t remember the precise content, or I’d quote it. NDA or no NDA.
scav
@burnspbesq: You mean that he survived all those S0cailiZt D0ct0rZ! and their S0cailiZed Medicine! of course, no? I am, however, reminded about the plane crash rant where Stewart went off about miracles v people doing their jobs (and getting very very very lucky, which I can add as I’m not going for comedic effect).
Corner Stone
I’ve done quite a bit of work for global entities. And if one wants to do business in Turkey, for example, or any of the various GCC nation states, there can be quite a bit of facilitation that happens.
But their Yankee masters want absolutely nothing to do with it, and when they determine something hinky went down, either through expense reporting or other financial reporting, they bust the ever loving shit out of whoever did the facilitating. Because that $5M in fees, or whatever amount the fee side may be, it puts a few $B in worldwide profits at risk. Either through damage to reputation or possible legal jeopardy.
I can state, with no hyperbole, that they would never, ever, immortalize such a practice in writing. Anywhere.
gaz
@Corner Stone: Absolutely they immortalize it in writing. They just call them Facilitation Payments.
Were I still working IT for the refinery I’d produce it for you. Sadly, I can no longer do that. Here’s the thing man, even if I wanted to lie, and I don’t – I wouldn’t have come up with this on my own. I did not, in fact, pull it out of my ass.
You wanna claim no evidence? Fine. Do so. That’s why I provided the link to the legalese to bolster my anecdote with the actual legal verbage behind what makes it work.
gaz
@Corner Stone: And I found some evidence online, that stands in direct contradiction to your claim:
limited circumstances in some countries outside of the United States, you may need to pay a government official to obtain a benefit to which Tesoro is entitled under local law. These facilitating payments must be modest in amount and necessary to achieve a valid business purpose. Never make a facilitating payment without first consulting the Legal Department. If you must make a facilitating payment, be sure to record and account for it properly.
Inappropriate or questionable payments made through an intermediary (i.e. third-party agent, representative, or vendor) are just as unacceptable as those that are made directly.
In Action
•
Don’t make payments or give gifts that are intended to increase the volume of business that customers do with Tesoro.
•
Never hide a payment or falsify business records.
•
Money must never be offered as a gift.
•
Never establish any secret, “off the books,” or unrecorded funds, assets, or transactions.
•
Intermediaries who represent Tesoro outside of the United States must comply with our Code of Business Conduct.
•
Please review Tesoro’s policy on anti-corruption and procedures before hiring any intermediaries.
It is just as wrong to offer a kickback as it is to accept a bribe.
International Trade
In Brief
Many laws govern the conduct of trade across borders. These include laws that are designed to ensure that transactions are not being used for money laundering or to support terrorism. Other laws prohibit companies from cooperating with unsanctioned boycotts, and there are complex laws that regulate exports. We are committed to complying with all such laws that are applicable in the countries in which we operate.
In Action
•
Maintain required import, export, and customs records at each Tesoro business location.
•
Seek guidance from the Legal Department when necessary to ensure that shipments of information or products across borders comply with laws governing imports and exports.
•
To help prevent and detect money laundering and terrorist financing, watch for any suspicious payments, which may include cash or the equivalent (when checks are the norm); payments made from personal accounts instead of business accounts;
From the link: google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=8450078&SessionID=8HKDFv…
bin Lurkin'
Rodney Dangerfield nailed how business is commonly done in his first ever economics class..
youtube.com/watch?v=YlVDGmjz7eM
gaz
@Corner Stone: I did find evidence to refute your claim. It’s been posted and is awaiting moderation. I included the relevant text, at this link: google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=8450078&SessionID=8HKDFv…
Feel free to Ctrl+F for “facilitating payments”
gaz
@gaz: lolwut? that comment is modded too? can some BJ staff fix this please? This is BS
gaz
Corner Stone, FYWP is moderating my rebuttal of your claim. It’s there. With links and a blurb straight out of the manual.
I tried posting the evidence in two different variations. It will eventually show up, I’m sure – once the staffers have had coffee maybe.
I can’t continue the discussion without making this point, because right now it’s suggested that I’m making this stuff up. I’m not offended by the suggestion, it’s just that since my credibility is in question, it’s kind of pointless for me to keep posting on this thread until my supporting evidence shows up. See you back here in awhile. Once those comments go through.
mattH
First, it seems that they might have paid for environmental regulations to be ignored, which could easily run afoul of any exceptions to bribery law.
Second, Wal-Mart claims to have the most stringent ethics policy in retail, yet the article shows it essentially gutting it’s investigative arm in response to the actions of that arm in Mexico, all while promoting individuals associated with the potential scandal. Not looking good from a PR perspective.
scav
stepping back a pace, a few random points of miscellaneous importance
They sure were pointing out that this was a NYT examination/reporting/whatever effort. Notwithstanding, this verges on an act of journalism.
NYT was very second fiddle on the Guardian Murdoch phone-hacking thing, which A) went off rather well at generating a whoosh (moreso in the UK to date) B) also is beginning to take on a FCPA tinnge (so we may even have semi-educamated reporters committing acts of journalism after watching how things sometimes work).
So those are two rather very largish companies with possible FCPA issues being possibly investigated but also being reported as such? Are there acts of governance/bureaucrasy being committed as well? Iz R Boardrumz Nervuz?
ETA: Utterly too small fish in the wrong ponds to know anything whatsoever about boardrumz and their nervous twitchings, let alone how often this was actively hunted down in past times. I just doing remember hearing about it.
Corner Stone
@gaz: I’m not suggesting you’re making anything up. If Tesoro chooses to do business that way, it’s fine with me. Let’s take it back a step.
In all my dealings, in a truly global environment, I have never seen a Risk Management Committee that would put in writing words to the effect that payments are authorized. Because they would have then left themselves open to any aggressive employee or facilitator.
Additionally, I have seen them jam up someone, more than one time, who did a little facilitating in a location out of the US.
While I, as an individual, understand the “need” to pay some respects to local officials in places round the world, the places I have worked punish that behavior when they discover it.
Edited a little
pseudonymous in nc
@gaz:
Yep. You can pay to grease the wheels, but not to have the machine rebuilt to your specifications.
gaz
@pseudonymous in nc: excellent summary
gaz
@Corner Stone: Fair enough.
And of course, parsing makes all the difference, especially with things like this.
Once my posts show up, it will illuminate what in particular I read.
The impression I get from the Tesoro MO is that if you must do it, document everything, contact Legal before you do, and be very careful. Rather than try to hide it, they establish a process and document everything. There’s more than one way to cover your ass I guess.
BethanyAnne
@Corner Stone: The funny thing is, I remember that bit of Walmart’s handbook from when I worked there. It was precisely vague. It said that we had a code of ethics, and that was binding on everyone. Except! The board could approve waivers as necessary. I remember boggling at a code of ethics with waivers.
300baud
Those days are not entirely gone. My brother just bribed his way through a border paperwork issue with Mexican migration police. At their prompting; it wouldn’t have occurred to him until they suggested a “fine” with a surprisingly negotiable price.
Origuy
Hewlett-Packard is under investigation because employees of a German subsidiary apparently bribed some Russian officials to sell some hardware. The story broke two years ago, and the investigation is still going on, in Germany and the USA. HP has to put notice about the investigation in its annual reports, and it continues to affect stock price.
The UK has a Bribery Act similar to the US’s FCPA. There are a lot of other countries with similar laws, although the enforcement varies. People have gone to jail, in the US and UK. Walmart corporate tried to sweep this under the rug. They should have remembered that the coverup can be worse than the crime.
I found a lot of information about anti-corruption activities at TRACE Blog.
KeithOK
@lol: Are you stupid enough to believe the President is behind every prosecution in the Country.
Actually, given your post, I don’t have to ask that.
JGabriel
__
__
Baud:
Exactly. Bribery is paying an official to look the other way while you break the law.
Campaign contributions are paying an official to change the law while everyone else looks away.
.
JC
I just rode a motorcycle to Costa Rica and back and all the people still pay bribes and I had to pay quite a few. Mexico City police rob the people every day.
This is me in Nicaragua with Pat Farmer, the guy who ran from the North Pole to the South Pole talking about all the corrupt customs and police we had to deal with on the way.
flickr.com/photos/7663413@N08/6906985351/in/photostream
Do not make anecdotes about shit that happened twenty years ago and act like you have a fucking clue what’s going on now.
Every country from here to Costa Rica takes bribes.
Just cause you think something, doesn’t make it so.
Good grief what the fuck is wrong with your head??
Corner Stone
@JC: Hey, are you on the Pacific side of Nicaragua? Brief impressions?
gaz
Also, I think Tesoro’s position, as I interpret it, is about as honest as any company that operates in the 3rd world can get. This is all a pretty above board way of making under the table payments. =)
I’m not saying it’s perfect. But in this respect, I think Tesoro’s got the right idea.
Gypsy howell
@JGabriel:
Campaign contributions are also quite helpful in ensuring that actual criminal acts are overlooked, downplayed, swept under the rug or at worst dealt with by a tiny slap on the wrist. I direct your attention to the mortgage, banking, insurance and other industries and the consequences they faced for outright fraud and other criminal behavior. Legalized bribery, but bribery nevertheless.
Gypsy howell
@JGabriel:
Campaign contributions are also quite helpful in ensuring that actual criminal acts are overlooked, downplayed, swept under the rug or at worst dealt with by a tiny slap on the wrist. I direct your attention to the mortgage, banking, insurance and other industries and the consequences they faced for outright fraud and other criminal behavior. Legalized bribery, but bribery nevertheless.
gloryb
No no no, its the JOB KILLING FCPA.@Baud:
labradog
@lol: Wow! “Fartbama”! That’s really funny and cool, how nobody likes farts, and you put “fart” with Obama’s name.
Now nobody will like Obama. Y’know, ’cause nobody likes farts!
It’s like the president is a fart – and nobody likes him, or farts!
Cool. You’re like Jon Stewart – I mean Jon Stewfart! Hey!
I dis it, too! Like, nobody likes farts, ’cause they smell like lol’s fingers!
John Emerson
@Baud: Yeah, bribery is when short dark foreigners do it.
There are complex etiquettes in place to distinguish political contributions from bribes, but no one should take these fig leaves seriously. It just weeds out the small time players. There’s a reasonw hy the financial industry hasn’t paid any price for criminal behavior destroying the world economy, and never will, and the reason is campaign contributions (to both parties.)
The idiot is you. Someone told you “the way we do it is a completely different thing” and you believed them.
Corner Stone
@lol: Thank you for being the perfect example of where this blog went wrong.
A bunch of humorless fucks have taken your obvious post and determined you are somehow anti-Obama. When anyone with two twitching brain cells knows you’re the hardest core of Obots.
Beautiful. And I appreciates yas.
Harry R. Sohl
Always lower bribes. Always.
Which is exactly why it leaked, stupid mofos!
~ Harry R. Sohl
irishdave3
@gaz: so the “Foreign Corrupt Practices Act” has been like, you know…REPEALED?
gaz
@irishdave3: I know reading is hard for some, but you could try to actually read the rest of the comments on the subject. Hey, do what you want, it’s just a suggestion – so that you can avoid sounding like a quasi-literate ass in the future. Thanks for playing.
PS: At some point, you may even consider reading the law, since you obviously don’t understand it.
gaz
@Corner Stone: It sounded like humor to me too.