Walmart to pay $282M for violating US anti-corruption rules in India, China, Brazil, Mexico
Global retail giant Walmart has agreed to pay $282.7 million to settle charges of violating anti-corruption regulations of the US while operating its business in India, China, Brazil and Mexico, announced the Security and Exchange Commission (SEC).
According to the SEC, these violations were conducted by its third-party intermediaries who made payments to foreign government officials without reasonable assurances that they complied with the Foreign Corrupt Practices Act (FCPA).
The SEC said on Thursday that it has charged the company with violating the FCPA by failing to operate a sufficient anti-corruption compliance programme for more than a decade as the retailer experienced rapid international growth.
The SEC brought the charges against Walmart in 2011. The global retailer 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, the SEC said.
"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 added.
The company 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, the company 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.
"We're pleased to resolve this matter," Walmart President and CEO Doug McMillon said in a statement.
He added, "Walmart is committed to doing business the right way, and that means acting ethically everywhere we operate. We've enhanced our policies, procedures and systems and invested tremendous resources globally into ethics and compliance, and now have a strong Global Anti-Corruption Compliance Program. We want to be the most trusted retailer, and a key to this is maintaining our culture of integrity."
In November 2017, the company disclosed that it had accrued approximately $283 million for the DOJ and SEC resolution. As a result, the amount will not materially impact the company's financial results, it said.
As part of the resolution, Walmart entered into a Non-Prosecution Agreement with the Department of Justice (DOJ). The DOJ will not prosecute the Company if, for a period of three years, it meets its obligations set forth in the agreement, the statement said.
At the end of January, Walmart had 2,442 stores in Mexico, 443 in China and 22 in India, CNN quoted the company's latest annual filing as saying.