The FCPA Report

The definitive source of actionable intelligence covering the Foreign Corrupt Practices Act

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By Topic: Wal-Mart

  • From Vol. 5 No.17 (Aug. 31, 2016)

    Eighth Circuit Dismisses Wal-Mart Shareholders’ FCPA-Related Derivative Suit

    In the more than four years since Wal-Mart’s Mexican bribery scheme was reported in The New York Times, the company has incurred sky-high expenses responding to the allegations and has revamped its compliance program. Although it has not yet reached an FCPA settlement with the government, it has recently prevailed in a string of shareholder actions in Arkansas related to the misconduct. In Cottrell v. Duke, the 8th Circuit affirmed the district court’s dismissal of shareholders’ consolidated derivative claims against the board. We analyze the court’s holding that the plaintiffs failed to adequately plead facts showing that a demand on the board to bring a suit would have been futile, and examine the effects the shareholders’ allegations had on the company. See “The Fallout From Wal-Mart’s Ongoing FCPA Investigation” (Jun. 25, 2014).

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  • From Vol. 3 No.16 (Aug. 6, 2014)

    Delaware Supreme Court Gives Wal-Mart Shareholder Access to Attorney-Client Privileged Documents

    Despite the American legal system’s reverence for the attorney-client relationship, the attorney-client privilege is not unlimited.  The interest of shareholders in investigating possible breaches of fiduciary duty or other misconduct by a corporation’s officers or directors may, in appropriate circumstances, defeat the privilege.  In 2012, a Wal-Mart shareholder sought access to documents – including documents subject to the attorney-client privilege and related work-product doctrine – relating to the alleged bribery of Mexican officials by a Wal-Mart subsidiary and Wal-Mart’s flawed investigation of that misconduct.  Affirming a Chancery Court ruling that ordered Wal-Mart to turn over privileged documents, the Delaware Supreme Court expressly adopted an exception to the attorney-client privilege for a corporate shareholder who shows “good cause” for obtaining the corporation’s privileged materials.  See also “When Are Reports of Internal Investigations Protected by Attorney-Client Privilege?,” The FCPA Report, Vol. 3, No. 9 (Apr. 30, 2014).

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  • From Vol. 3 No.13 (Jun. 25, 2014)

    The Fallout From Walmart’s Ongoing FCPA Investigation

    Walmart’s ongoing trials and tribulations demonstrate that anti-corruption violations can have ramifications far beyond the costs of a fine or penalty.  More than two years after Walmart’s anti-corruption troubles began, it is still suffering significant collateral consequences.  The retail giant has been deeply embroiled in a wide-ranging internal investigation since its 2011 SEC disclosure of possible FCPA violations, followed by the 2012 New York Times report that Walmart had paid over $24 million in bribes in Mexico.  The company has poured hundreds of millions of dollars into the investigation, overhauled its compliance program and personnel, and has faced criticism regarding the independence of its board, with Institutional Shareholder Services recommending that the company take actions to improve transparency and independence.  The company has also been the subject of ongoing civil litigation related to the bribery allegations.  See “How to Anticipate and Manage Collateral Litigation after an FCPA Investigation Becomes Public,” The FCPA Report, Vol. 2, No. 17 (Aug. 21, 2013). 

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  • From Vol. 3 No.10 (May 14, 2014)

    Walmart’s Global CCO Discusses the Company’s Restructured Anti-Corruption Compliance Program

    The high-profile bribery allegations against Wal-Mart Stores (Walmart) put the FCPA in a global spotlight, prompting board members across the country to ask counsel about corruption risks.  The company itself, a global retail behemoth, has been deeply embroiled in a wide-ranging internal investigation since its 2011 SEC disclosure of possible FCPA violations, followed by the 2012 New York Times report that Walmart had paid over $24 million in bribes in Mexico.  The investigation has cost the company upwards of $500 million so far.  Walmart hired Jay Jorgensen as Senior Vice President and Global Chief Compliance Officer to lead the compliance efforts in 2012.  Jorgensen explained the details of Walmart’s new compliance program in a recent interview at the Dow Jones Global Compliance Symposium and discussed the lessons Walmart learned and the challenges that large multi-national companies face in constructing effective compliance programs.  See “A Guide to Disclosing Corruption Investigations in SEC Filings (Part Three of Four),” The FCPA Report, Vol. 2, No. 11 (May 29, 2013) (tracing Walmart’s disclosures).

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  • From Vol. 2 No.11 (May 29, 2013)

    A Guide to Disclosing Corruption Investigations in SEC Filings (Part Three of Four)

    Many multi-national public companies with robust anti-corruption compliance programs will discover, at some point, evidence of potential fraud that requires an internal investigation.  See “Handling the Challenges of Overseas Anti-Corruption Investigations: Forensic Accountants, Government Expectations, Translators, Upjohn Warnings, Privilege Issues and Recording Interviews,” The FCPA Report, Vol. 2, No. 9 (May 1, 2013).  When a publicly traded company performs such an investigation, it is faced with a series of difficult questions.  Among the most vexing and urgent questions are whether and when the company should disclose the investigation in an SEC filing.  Should the company wait until it completes the investigation?  Should it wait until after it has disclosed to the DOJ and the SEC?  How much evidence of actual corruption is needed to justify the filing?  What information should the disclosure include?  When answering these questions, companies must consider the serious consequences of publicly reporting FCPA concerns.  Companies that publicly disclose such information may face civil lawsuits, stock price volatility, reputational issues, damage to employee morale and productivity, loss of current government contracts and debarment from future contracts.  See “Doing Business with the World Bank: Understanding and Avoiding Debarment,” The FCPA Report, Vol. 2, No. 10 (May 15, 2013).  The FCPA Report is publishing a series of articles addressing best practices for disclosing anti-corruption investigations in SEC filings.  The series provides insight on when a company should disclose and strategies for mitigating the negative impact of a disclosure, including guidance on timing and language to include in the disclosure.  In addition to analysis and insight from practitioners, this series will include a compendium of actual FCPA-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.  These real-world examples of relevant disclosures can serve as precedents for counsel tasked with drafting or reviewing SEC filings relating to an FCPA issue.  This article, the third in the series, provides insight on the most effective language to use in disclosures, and analyzes Wal-Mart’s disclosures at critical decision points in its recent investigation.  The first article in the series discussed factors that companies should consider when determining whether a public disclosure is appropriate; what experts a company should retain to help it make appropriate disclosure decisions; and the risks and benefits of disclosing at different stages of the anti-corruption investigation.  The second installment in the series detailed the risks inherent in disclosure and non-disclosure; addressed ways to diminish those risks, including handling media coverage; and discussed best practices when disclosing foreign investigations to the SEC.  Finally, in the last article in the series, The FCPA Report will publish the referenced compendium of SEC disclosures, categorized by their attributes.

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  • From Vol. 1 No.10 (Oct. 17, 2012)

    Walmart International Hires Daniel Trujillo as Head of International Compliance

    Walmart International has hired Daniel Trujillo as its head of international legal compliance, according to an internal company memo obtained by The FCPA Report.

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  • From Vol. 1 No.7 (Sep. 5, 2012)

    Pension Fund Sues Wal-Mart to Gain Access to Documents Pertaining to Mexican FCPA Allegations

    In preparation for a possible shareholder’s derivative suit, and claiming that Wal-Mart Stores, Inc. (Wal-Mart), has “made a mockery” of the Delaware law that affords shareholders the right to inspect corporate books and records, the Indiana Electrical Workers Pension Trust Fund IBEW (Trust) has sued Wal-Mart in the Delaware Court of Chancery.  The Trust seeks access to Wal-Mart’s books and records, and the records of Wal-Mart’s Mexican subsidiary, Wal-Mart de Mexico, S.A. de C.V., that relate to their handling of allegations of corruption, bribery and violations of the FCPA in their Mexican operations.  This article provides the background of the dispute and a summary of the Trust’s allegations.

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  • From Vol. 1 No.6 (Aug. 22, 2012)

    Compliance Implications of the Current Enforcement Climate: An Interview with Mike Koehler, the FCPA Professor (Part One of Two)

    The FCPA Report recently interviewed Mike Koehler, Assistant Professor at Southern Illinois University School of Law and author of the popular blog the FCPA Professor.  He has testified before Congress and written extensively about FCPA issues.  Professor Koehler previously was Assistant Professor of Business Law in the College of Business at Butler University, and before that was an attorney at Foley & Lardner LLP, where he conducted FCPA investigations on behalf of companies, negotiated resolutions to FCPA enforcement actions with government enforcement agencies and advised clients on FCPA compliance and risk assessment.  In the first part of our interview, which is included in this issue of The FCPA Report, Professor Koehler spoke about the long tail on FCPA violations and the “gray cloud” that hangs over companies once they self-report, and he questioned whether companies should self-report at all.  See also “When and How Should Companies Self-Report FCPA Violations? (Part Two of Two),” The FCPA Report, Vol. 1, No. 2 (Jun. 20, 2012).  He also shared compliance advice in light of recent enforcement trends relating to facilitation payments, the “obtain or retain business” element of the statute and the definition of foreign officials.  In addition, Professor Koehler discussed compliance lessons arising out of the unique way the FCPA is enforced and the relative lack of judicial scrutiny of the statute.

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  • From Vol. 1 No.1 (Jun. 6, 2012)

    As Part of Wal-Mart Investigation, House Members Question the Efforts of the Chamber of Commerce to Amend the FCPA

    The U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) and the Retail Industry Leaders Association (RILA), among other business groups, have been pushing hard for amendments to the FCPA.  Now, as part of the congressional investigation into Wal-Mart’s alleged bribery of Mexican officials, Oversight and Government Reform Committee Ranking Member Elijah E. Cummings (D. Maryland) and Energy and Commerce Committee Ranking Member Henry A. Waxman (D. California) are asking for more information about the relationship between Wal-Mart executives and other companies represented by the Chamber’s ILR and RILA and the groups’ efforts to “weaken” the FCPA.

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