Yesterday, Walmart entered into a Non-Prosecution Agreement to settle allegations that it violated the Foreign Corrupt Practices by paying an intermediary in Brazil for help obtaining construction permits and operating without a system of sufficient anti-corruption related internal accounting controls in Brazil, China, India, and Mexico. Walmart Inc. will be required to pay the DOJ and SEC $282 million:
- In the criminal action, Walmart paid penalties of $138 million. Its Brazil subsidiary, WMT Brasilia S.a.r.l., agreed to plead guilty to violating the FCPA’s accounting standards. Walmart agreed to retain an independent corporate compliance monitor for two years.
- In the SEC’s civil action, Walmart paid $144.7 million in disgorgement and prejudgment interest. The SEC settled the action through an internal administrative order and didn’t go to court.
Walmart failed to sufficiently investigate or mitigate known corruption risks and allegations. They failed to provide “immediate widespread anti-corruption training” or a detailed FCPA policy covering third-party intermediaries and joint venture partners, despite a request for them from a China subsidiary. They received anonymous emails alleging improper payments to government officials, however, despite the emails and numerous earlier red flags, Walmart didn’t begin “to implement and maintain a system of sufficient internal accounting controls related to anti-corruption” for years.
Over the past few years, Walmart has spent more than $900 million investigating potential FCPA offenses and enhancing its anti-bribery compliance program, according to various SEC filings. They have hired numerous compliance officers at headquarters and regionally, with separate reporting lines to the board’s audit committee. Additionally, they have enhanced their compliance monitoring and training, implemented “an automated global license management system for obtaining and renewing licenses and permits,” and put in place global controls for charitable donations. The company also stopped doing business with third parties involved in the FCPA violations.
The FBI’s Robert Johnson said in a statement Thursday that the “FBI will hold corporations responsible when they turn a blind eye to corruption…If there is evidence of violations of the FCPA, we will investigate. No corporation, no matter how large, is above the law”.