Thursday, April 26, 2012


Ripple effect


A New York Times article headlined "With Wal-Mart Claims, Greater Attention on a Law" (see tells how an alleged Wal-Mart bribery-in-Mexico incident in 2005 is costing the retail giant in 2012.

The allegation that Wal-Mart violated the once rarely enforced Foreign Corrupt Practices Act (FCPA) by bribing a Mexican official has, according to Paul Pelletier, a former Justice Department prosecutor who worked on Foreign Corrupt Practices Act investigations, cost the company "billions."

More than that, it has put other organizations on alert that suspected FCPA violations will be the focus of government attorneys.

Pelletier contends that Wal-Mart's loss of "billions in market capitalization over these last few days is going to make companies in close cases more likely to err on the side of promptly self-reporting.”

Making things worse for Wal-Mart is the additional allegation that it "suppressed an internal inquiry into bribery in Mexico in 2005."

Although there are those who will argue that the FCPA should apply only to bribery involving the U.S. government and its contractors, the financial damage to Wal-Mart apparently already has been done.

From a "business continuity" perspective, there is little that a practitioner could do.

I'm not certain even an Enterprise Risk Management practitioner could have done anything more than what probably already was in place, i.e., policies and procedures prohibiting potential FCPA violations. Still, having policies and procedures in place - and known by all who might be in a compromising situation - would give the organization some defense by performing "due diligence."

Wal-Mart's mistake, if it indeed did what is alleged, was trying to cover it up. Shades of Watergate.

FCPA is gaining more attention. I had the pleasure of working for an organization, World Compliance (, that has uncovering FCPA violations as one of its main products.

The World Compliance "take" on the Wal-Mart incident can be read at

While a practitioner may not be able to prevent FCPA violations, the practitioner must assure that the focus of the act is known, and understood, by very senior management. That does not mean that the practitioner needs to present the issue to senior management, but it means that the practitioner should see that the appropriate Subject Matter Experts - in this case, Legal or retained lawyers - include FCPA in their presentations to the Boards and Executive Suites.

If I wrote it, you may quote it.

Longer articles at