Report: Wal-Mart, feds settle foreign bribery probe for $300M

Dive Brief:

The U.S. Department of Justice and the Securities and Exchange Commission have settled on $300 million penalty that would close federal investigators’ five-year probe into Wal-Mart Stores Inc.’s foreign bribery debacle, The Wall Street Journal reports. A request from Retail Dive to Wal-Mart for comment wasn’t immediately returned.
The figure is well below the Obama-era settlement that was reportedly as much as $1 billion, according to the report, suggesting that the Trump administration is willing to go easier on the retail giant.
In January, Wal-Mart and federal prosecutors reportedly were struggling to come to terms over a settlement, at least in part because acknowledging wrongdoing could endanger its ability to participate in federal programs.

Dive Insight:

For five years, the U.S. government has been investigating Wal-Mart under the Foreign Corrupt Practices Act, which prohibits and monitors improper international dealings like bribery. Talks fell apart last fall as the Obama administration prepared to wind down, but government officials renewed their investigation, according to earlier press reports.

Organizations that plead guilty to federal crimes can be blocked from winning government contracts, meaning Wal-Mart — the country’s largest grocer — could lose its access to the Supplemental Nutrition Assistance Program, commonly known as food stamps, which accounted for some $13 billion of its sales last year.

In some areas of the world, bribing officials is an accepted practice to obtain building permits and licensing, and to close business deals. It’s not exactly copacetic from the perspective of the U.S. government, however, as Wal-Mart Stores Inc. and its Mexican division, Walmart de México, have found. U.S. investigators looking into Wal-Mart’s dealings there eventually expanded their probe elsewhere, including Brazil, India and China.

Still, there are grey areas. In some countries, "gifts" are expected during business negotiations. The U.S. Department of Justice has a guide — including case studies — on how to comply with the Foreign Corrupt Practices Act of 1977, which outlaws the kind of activity that has Wal-Mart in so much hot water, while still keeping up with business gift customs.

Wal-Mart's bribery scandal has been a thorn in the retailer's side, with investigative press reports (a story originally broken by The New York Times launched the probe), government inquiries on both sides of the border and criminal court proceedings costing the retailer dearly — reportedly more than $820 million (before the proposed $300 million penalty). Those costs would be compounded mightily if Wal-Mart were to lose its ability to participate in the federal SNAP program. Any major grocer derives a fair business from SNAP, and the demographics of Wal-Mart’s customer base in particular include many consumers on the lower end of the income scale.