Wal-Mart Stores Inc., which is investigating possible bribery in Mexico, told employees that the purported violations “occurred more than six years ago” and are “not a reflection of who we are or what we stand for.”
An April 21 memo from Jeff Gearhart, the company’s general counsel and corporate secretary, told employees that a New York Times story to be published the next day said Wal-Mart representatives in Mexico bribed local officials to get stores opened faster. David Tovar, a company spokesman, confirmed the memo’s authenticity today.
“These alleged violations, many of which occurred more than six years ago, involved claims of illegal payments in Mexico primarily to obtain permits for new stores,” Gearhart said in the memo. “None of us likes to hear our company talked about in this way. But I do not have to tell you that the alleged activity is not a reflection of who we are or what we stand for -- not now and not then.”
Wal-Mart de Mexico SAB slumped the most in 17 years after the story broke. Wal-Mart de Mexico, which is 69 percent owned by Wal-Mart Stores Inc., fell as much as 16 percent in Mexico City trading, the biggest intraday decline since Jan. 10, 1995. The shares dropped 12 percent to 38 pesos at 8:47 a.m. local time. Shares of the parent company declined the most since May 2010.
Wal-Mart fell 4.1 percent to $59.91 at 9:46 a.m. in New York after dropping as much as 5.3 percent, the biggest intraday decline since May 6, 2010. The shares had risen 4.5 percent this year before today
The Times article said the bribes may have amounted to more than $24 million in payments. The Wal-Mart memo said the company started a review of its anti-corruption program in the spring of 2011, which led to an internal investigation “late last year” involving outside lawyers and forensic accountants.
Wal-Mart has hired auditing firm KPMG and law firm Greenberg Traurig LLP for a compliance review of its global operations and law firm Jones Day to investigate its Mexican operations, said a person familiar with the matter.
Wal-Mart has said it has met voluntarily with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to discuss the case. The company is also enhancing its audit procedures and internal controls to escalate to management possible violations of the bribery law.
“We are moving aggressively to determine the facts,” said Gearhart, who is also an executive vice president.