Walmart Agrees to Pay $282M and Hire Louis Freeh as Monitor in FCPA Settlement
In the criminal part of the settlement, the company signed a nonprosecution agreement with the DOJ in which it agreed to pay a $138 million penalty to settle violations of the Foreign Corrupt Practices Act. The SEC announced that the company also agreed to pay another $144 million to settle related claims.
June 20, 2019 at 02:35 PM
4 minute read
Walmart Inc., the world's largest retailer, agreed Thursday to resolve its bribery cases in Mexico, Brazil, China and India with the U.S. government by paying a total of $282 million.
The company agreed to sign a three-year nonprosecution deal and to hire former FBI director Louis Freeh as its corporate monitor.
In the criminal part of the settlement, the company signed the nonprosecution agreement with the U.S. Department of Justice in which it agreed to pay a $138 million penalty to settle violations of the Foreign Corrupt Practices Act. Its Brazilian subsidiary, WMT Brasilia, agreed to plead guilty to a single violation.
Walmart Brasilia indirectly hired a third party whose ability to obtain licenses and permits earned her the nickname “sorceress” or “genie” within the company, the DOJ said. Walmart Brazil employees, including a Walmart Brazil executive, knew they could not hire the intermediary directly because of several red flags.
The U.S. Securities and Exchange Commission announced the company also agreed to pay another $144 million for disgorgement and interest to settle related claims.
“Walmart profited from rapid international expansion, but in doing so chose not to take necessary steps to avoid corruption,” said Assistant Attorney General Brian Benczkowski. “In numerous instances, senior Walmart employees knew of failures of its anti-corruption-related internal controls involving foreign subsidiaries, and yet Walmart failed for years to implement sufficient controls comporting with U.S. criminal laws.
Walmart, which acknowledged and accepted responsibility for the misconduct, said in a statement that the global resolution ends all FCPA-related investigations or inquiries into the company and its subsidiaries by the DOJ and the SEC.
Walmart president and CEO, Doug McMillon, issued a statement saying, “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.”
Karen Hewitt of Jones Day handled the settlement negotiations for Walmart in a case that has lingered for eight years and signed the agreement. It was also signed by Walmart's Gordon Allison, senior vice president and chief counsel for finance and corporate governance.
The SEC said the matter concerned violations of the books and records and internal accounting control provisions of the FCPA.
“From in or around July 2000 through or around April 2011, Walmart's subsidiaries in Brazil, China, India, and Mexico operated without a system of sufficient anti-corruption related internal accounting controls. As a result, during this time period, those Walmart subsidiaries paid certain third-party intermediaries without reasonable assurances that certain transactions were consistent with their stated purpose or consistent with the prohibition against making improper payments to government officials,” the SEC said.
It added, “During this time period, when Walmart learned of certain anti-corruption risks, the company did not either sufficiently investigate the allegations or sufficiently mitigate the known risks.”
The original allegations, made by an in-house lawyer at Wal-Mart de Mexico in an article in The New York Times in 2012, claimed the company paid millions of dollars in bribes all over that country to obtain building permits so it could win market dominance. He claimed he tried to blow the whistle in 2005, but no one at Walmart listened.
Walmart publicly revealed the bribery allegations in 2011 after the Times began its reporting. The investigation then expanded into Brazil, India and China.
Since then the Bentonville, Arkansas-based company has reported spending nearly $1 billion on the internal investigation, shareholder lawsuits and related expenses to build a state-of-the-art global compliance program.
Now Freeh, also a former federal judge, will be watching the compliance program for the next two years. He is founder and chairman of Freeh Group International Solutions, a global risk management firm that will be working with Walmart. He is also founder and senior managing partner of an affiliated law firm, Freeh Sporkin & Sullivan.
Freeh also served as general counsel to MBNA America Bank from 2001 until it was acquired by Bank of America in 2007.
He previously served as a compliance monitor from 2010 to 2013, for German vehicle maker Daimler after it signed a three-year deferred prosecution agreement over FCPA violations.
|This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllLegal Chief of Retailer Beyond Exiting at Tumultuous Time
Dog Gone It, Target: Provider of Retailer's Mascot Dog Sues Over Contract Cancellation
4 minute readNike Promotes Legal Chief to Marketing Chief as New CEO Launches Turnaround
King Kullen—the Nation's First Supermarket—Hires Outside Counsel as GC
Trending Stories
- 1Judge Grants Special Counsel's Motion, Dismisses Criminal Case Against Trump Without Prejudice
- 2GEICO, Travelers to Pay NY $11.3M for Cybersecurity Breaches
- 3'Professional Misconduct': Maryland Supreme Court Disbars 86-Year-Old Attorney
- 4Capital Markets Partners Expect IPO Resurgence During Trump Administration
- 5Chief Assistant District Attorney and Litigator Shortlisted for Paulding County Judgeship
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250