BajaNomad

Wal-Mart bribes Mexican Officials?

ncampion - 4-22-2012 at 08:19 AM

So what's so unusual about this? Isn't that the way most business is done in Mexico?

http://www.dailyfinance.com/article/report-wal-mart-hushed-u...





[Edited on 4-22-2012 by BajaNomad]

Taco de Baja - 4-22-2012 at 09:16 AM

What's the big deal? really?
Lots of companies in the USA, Mexico and all over the world grease the hands politicians and officials to move things along a little faster. What the heck do people think the job of a "lobbyist" is? Just to convince the officials with words? Ha!

But of course, since the "evil" Walmart is involved, this will turn into a big story. The fact that Wally-world is Mexico's largest private employer, is not relevant.

It would sure be interesting to find out the "donations" from companies like Coke, Micky-D's, GM, Ford, Kimberly-Clark, and Big Oil to the Mexican officials.

DENNIS - 4-22-2012 at 09:27 AM

During the Reagan administration, I distinctly remember reading that bribes paid in Mexico by US businesses trying to establish a foothold in the newly opening market, would be tax deductable. Don't know if it holds true today, but that might explain the free and easy attitude behind paying bribes for business.
Besides, you can't buy that which isn't for sale.

Not likely

thebajarunner - 4-22-2012 at 09:59 AM

Quote:
Originally posted by DENNIS
During the Reagan administration, I distinctly remember reading that bribes paid in Mexico by US businesses trying to establish a foothold in the newly opening market, would be tax deductable. Don't know if it holds true today, but that might explain the free and easy attitude behind paying bribes for business.
Besides, you can't buy that which isn't for sale.


Dennis
I have no doubt that you read that somewhere....
but the reality is simple, the Federal Tax Code is very specific and never, ever allows deductions for bribes.

Now, we can fine tune this a bit, and of course we can always find legitimate (ahem) places close to the politician heart that will be eligible for deduction.

And, as pointed out, no problem deducting the cost of "lobbying"
But since most lobby dudes are ex politicians, well, we know that they are full of integrity and only "doing the right thing"

So, bribery- no
Influence- you bet
That is just the way it works,

You know the Golden Rule, I hope

"He who has the gold, makes the rule"

DENNIS - 4-22-2012 at 10:15 AM

Yeah....I never imagined they called it a bribe. Probably just mixed it into expenses.

bajachris - 4-22-2012 at 10:25 AM

Do you know why there's such a fight against Walmart? Because they don't accept Unions! The unions will stop at nothing to spread to every large chain store.

danaeb - 4-22-2012 at 10:25 AM

Quote:
Originally posted by DENNIS
Yeah....I never imagined they called it a bribe. Probably just mixed it into expenses.


If proven true, the FCPA isn't just going to slap their wrists. The fines can be huge, even for WalMart.

http://www.foreign-corrupt-practices-act.org/fcpa-guide/4-gu...

Along with the fines, there is also the potential loss of licenses to operate. This is usually threat enough to keep most businesses from doing it.

I worked for a big-3 oil company. Everyone, and I do mean everyone in the company had yearly mandatory training on the FCPA provisions. They took it VERY seriously.

[Edited on 4-22-2012 by danaeb]

DENNIS - 4-22-2012 at 10:35 AM

If WalMart has their way, they'll be the only retailer left standing. Would there be any ant-trust issues here?

DENNIS - 4-22-2012 at 10:39 AM

Quote:
Originally posted by danaeb
This is usually threat enough to keep most businesses from doing it.



I have to imagine they've found a way to share and hide gratuities without telling the FCPA folks.

Here is the CNN Update on the Story

Gypsy Jan - 4-22-2012 at 12:41 PM

http://www.cnn.com/2012/04/22/business/walmart-mexico-probe/

DENNIS - 4-22-2012 at 12:56 PM

Sooo....they pay a hefty fine. Then, they raise the price of dog food two% and they're back even in thirty days.
What are the going to do to the Walton family? Take away their birthdays?

this is news???

bajaguy - 4-22-2012 at 12:59 PM

What's the big deal???........it's the ingrained culture in Mexico. If you want anything done, a little grease helps the wheels roll.

Plenty of posts here regarding Nomads involved in bribery.....with the police.....it's called Mordita.

DENNIS - 4-22-2012 at 01:06 PM

Quote:
Originally posted by bajaguy
What's the big deal???........it's the ingrained culture in Mexico. If you want anything done, a little grease helps the wheels roll.




I guess there's a lot of folks up north that don't realize that fact of life.

Another Update from wonkette,com

Gypsy Jan - 4-22-2012 at 03:03 PM

http://wonkette.com/470561/wal-mart-de-mexico-flips-a-peso-b...

J.P. - 4-22-2012 at 03:16 PM

Quote:
Originally posted by DENNIS
If WalMart has their way, they'll be the only retailer left standing. Would there be any ant-trust issues here?




Isn't that the way Russia went with the State stores?

DENNIS - 4-22-2012 at 03:19 PM

Quote:
Originally posted by J.P.


Isn't that the way Russia went with the State stores?



I believe so. Cuba is still that way....I think.

Cypress - 4-22-2012 at 03:23 PM

Wal Mart is an example of "free interprise". They have good prices and a good selection. You can buy food items, clothing, hardware, and anything else you need at discount prices. Is that a bad thing?:o

Phil S - 4-22-2012 at 03:28 PM

HECK NO, and THAT IZZZZZZZ a good thing.

DENNIS - 4-22-2012 at 03:49 PM

I just get nervous when competition is eliminated.

Bajahowodd - 4-22-2012 at 05:15 PM

As everyone has already posted, in reality, it is no big deal in Mexico. It's the way business is done.

That said, my own curiosity is about the business structure of Walmart. Seems to me that historically, Mexican law would not allow foreign partners to own a majority of any company doing business in Mexico. Hence, virtually all the well recognized US brands such as Costco, Home Depot, Etc. have historically been at least 51% owned by a Mexican partner.

As my internet search skills are somewhat limited, I must admit that although I've tried to ferret out the details, it does seem to me that Walmart de Mexico is actually a wholly-owned subsidiary of the folks in the US. If that is true, despite the long-standing Mexican tradition of bribery, the US State Department and those overseeing business and tax responsibilities could seemingly make life miserable for Walmart.

danaeb - 4-22-2012 at 05:27 PM

It's not about MEXICO. It's about the FCPA. Under the FCPA, if an American company doing business abroad becomes aware of a bribe, they're partially off the hook if they report it. But if they don't, and subsequently cover it up, as it's beginning to look like in this case, there are very hefty penalties. There was a really good summary in Forbes Mag over the weekend regarding the potential impact to WalMart.

This will be a big story.



[Edited on 4-23-2012 by danaeb]

DENNIS - 4-22-2012 at 05:30 PM

Quote:
Originally posted by Bajahowodd
That said, my own curiosity is about the business structure of Walmart. Seems to me that historically, Mexican law would not allow foreign partners to own a majority of any company doing business in Mexico.


I'm under the impression that isn't the case with corporations.

DENNIS - 4-22-2012 at 05:33 PM

Quote:
Originally posted by danaeb
It's not about MEXICO. It's about the FCPA. Under the FCPA, if an American company doing business abroad becomes aware of a bribe, they're partially off the hook if they report it.



Bribe....Fee....Gift.....Tax......semantics. If it isn't illegal in Mexico where it occurs....how can it be illegal anywhere else?

danaeb - 4-22-2012 at 05:40 PM

Under the FCPA, it's illegal for a US Company or US person to bribe a foreign official. The country is irrelevant. It's the bribe.

[Edited on 4-23-2012 by danaeb]

From a NY Times report 7 years ago

durrelllrobert - 4-22-2012 at 06:22 PM

When the Arkansas-based US retailer sent investigators to Mexico City in 2005 they quickly uncovered widespread bribery, the Times said.

An internal probe found a paper trail, said the report, amounting to over $24 million in suspected payments.

Really???

bajaguy - 4-22-2012 at 06:55 PM

Quote:
Originally posted by danaeb
Under the FCPA, it's illegal for a US Company or US person to bribe a foreign official. The country is irrelevant. It's the bribe.

[Edited on 4-23-2012 by danaeb]





So if a US citizen pays mordita to a Mexican police officer, it's a US Federal crime???

Ant-Trust Issues ?

MrBillM - 4-22-2012 at 08:20 PM

Disregarding the the fact that Ants probably can't be trusted, there shouldn't be a problem if the stores are kept clean of spills.

DENNIS - 4-22-2012 at 08:45 PM

Quote:
Originally posted by MrBillM

Ant-Trust Issues ?


Disregarding the the fact that Ants probably can't be trusted, there shouldn't be a problem if the stores are kept clean of spills.



Damn. Now I have to live with my shame. :lol:

Higher prices in Wal-Mart in Mexico..

EnsenadaDr - 4-22-2012 at 09:34 PM

Quote:
Hmmm...I wondered why the prices were so much higher in the Mexican Wal-Marts.
When the Arkansas-based US retailer sent investigators to Mexico City in 2005 they quickly uncovered widespread bribery, the Times said.

An internal probe found a paper trail, said the report, amounting to over $24 million in suspected payments.

Hook - 4-23-2012 at 06:24 AM

This could turn out to be another international black eye for Mexico.

http://news.yahoo.com/wal-mart-probe-lifts-lid-culture-bribe...

No

danaeb - 4-23-2012 at 07:13 AM

Quote:
Originally posted by bajaguy
Quote:
Originally posted by danaeb
Under the FCPA, it's illegal for a US Company or US person to bribe a foreign official. The country is irrelevant. It's the bribe.

[Edited on 4-23-2012 by danaeb]





So if a US citizen pays mordita to a Mexican police officer, it's
a US Federal crime???


It covers US companies or US Persons (not the same as a US citizen). This has nothing to do with traffic stops...

Here's a summary of the law, if you're interested:

http://library.findlaw.com/1997/Jan/1/126234.html

[Edited on 4-23-2012 by danaeb]

BajaBruno - 4-23-2012 at 09:32 AM

If you take the time to read the excellent New York Times article that broke this story, http://www.nytimes.com/2012/04/22/business/at-wal-mart-in-me...
it describes a pattern of corruption and cover-up that occurred principally while Eduardo Castro-Wright was in charge of Wal-Mart Mexico and dropped off greatly after he was promoted to Wal-Mart Vice Chairman.

While it is true that many companies probably "grease the wheels" in Mexico to some degree, Wal-Mart is also accused of using bribes to circumvent environmental regulations and expedite building permits without the oversight required by Mexican law.

Wal-Mart also hushed its own internal investigations of corruption, restricted its internal investigations unit from interviewing corporate officers and shut down corruption investigations around the world. Even after its ethics officers and legal team complained and in some cases resigned in protest, Wal-Mart managers continued to demonstrate an attitude of unaccountability to U.S. and foreign anti-corruption laws.

So, this isn't just a case of a little mordida being tossed here and there--it is a corporate culture than considers itself so big and so powerful that it is immune to the laws that others must adhere to. That sort of monopolistic model is bad for competition, bad for consumers and business in general, and must be slapped down by a higher authority, namely the Department of Justice.

rts551 - 4-23-2012 at 09:50 AM

Nothing new here. Don;t know why anyone would be surprised. Walmart has been using the model of corruption for years. It hasn't been thatlong ago thqat they were charged with underpricing in order to drive competitors (read small business) out.

Taco de Baja - 4-24-2012 at 07:19 AM

Maybe it's not so bad, with semantics added in :rolleyes:
Quote:
The New York Times’ article detailing a “vast Mexico bribery case hushed up by Wal-Mart” includes many accusations of bribery that may not be illegal under the Foreign Corrupt Practices Act.

....many of the allegations reported in the New York Times could reasonably be interpreted as falling under the so-called “facilitating payments” exception. A facilitating payment, often referred to as a grease payment, is a payment that is made to influence the timing of something like a permit and not intended to influence the outcome of routine government actions. These kinds of payments are generally not considered to fall under the definition of bribery under the FCPA, the main U.S. anti-bribery law.


Forbes