Walmart to pay over $282 million for violating anti-corruption regulations in 4 countries including India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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International retail giant Walmart on Thursday agreed to pay over $282 million to various US bodies to settle charges of violating anti-corruption regulations while conducting its business in India, China, Brazil and Mexico.

According to the US Security and Exchange Commission (SEC), these violations were conducted by Walmart’s third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the Foreign Corrupt Practices Act or FCPA.

SEC has charged Walmart with violating FCPA by failing to operate a sufficient anti-corruption compliance programme for more than a decade as the retailer experienced rapid international growth.

Walmart agreed to pay more than $144 million to settle the SEC’s charges and approximately $138 million to resolve parallel criminal charges by the Department of Justice for a combined total of more than $282 million, SEC said.

The enquiry into Walmart, which was conducted by the Department of Justice and the Securities and Exchange Commission, came after a New York Times investigation in 2012.

The questionable payments made in India were often recorded on the company’s books with vague descriptions like “professional fees” and “incidental”, the Times reported. As late as July 2011, Walmart received an anonymous tip that an employee in India was involved in a scheme to make improper payments to government officials, but the company never looked into it, the newspaper reported.

Last year, Walmart paid $16 billion for a majority stake in Flipkart, India’s largest online retailer.

Many of Walmart’s most senior executives in Mexico, India and Bentonville, Ark., left the company in the wake of The Times’s investigation, according to the Times.

“Walmart valued international growth and cost-cutting over compliance,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit.

“The company could have avoided many of these problems, but instead Walmart repeatedly failed to take red flags seriously and delayed the implementation of appropriate internal accounting controls,” he said.

Walmart consented to the SEC’s order finding that it violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934.

According to the SEC’s order, Walmart failed to sufficiently investigate or mitigate certain anti-corruption risks and allowed subsidiaries in Brazil, China, India, and Mexico to employ third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the FCPA.

The SEC’s order details several instances when Walmart planned to implement proper compliance and training only to put those plans on hold or otherwise allow deficient internal accounting controls to persist even in the face of red flags and corruption allegations.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow